Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Abertillery and District Water Board Bill [Lords],

Dearne Valley Water Board Bill [Lords],

Great Yarmouth Water Bill [Lords],

Lancaster Corporation Water Bill [Lords],

Maidenhead Gas Bill [Lords],

Mersey Railway Bill [Lords],

River Lee Watershed (Flood Prevention) Bill [Lords],

Read a Second time, and committed.

South Wales Electrical Power Distribution Company Bill [Lords],

To be read a Second time To-morrow.

PORTSMOUTH CORPORATION BILL.

Reported, with Amendments, from the Local Legislation Committee; Report to lie upon the Table, and to be printed.

Oral Answers to Questions — ANGLO-PERSIAN OIL COMPANY.

Commander Viscount CURZON: 1.
asked the Under-Secretary of State for Foreign Affairs whether he will, in the public interest, ascertain and state the price at which the Anglo-Persian Oil Company, in which the British Government has a controlling interest, is now selling its petrol to the Royal Dutch Shell group; and whether that price varies in accordance with the market price of petrol, or is a fixed price during the term of the contract between the company and the Shell group??

The PARLIAMENTARY SECRETARY to the DEPARTMENT of OVERSEAS TRADE (Mr. Kellaway): As stated in reply to the hon. Member for Central Nottingham on 29th March, it is regretted that the price ruling under this contract cannot be stated. It has previously been made clear that this particular contract was concluded before His Majesty's Government acquired an interest in the company.

Viscount CURZON: Are we to understand from the answer that the Government do not know the price, or that they do not like to state it?

Mr. KELLAWAY: I believe the price was given before the Profiteering Committee.

Sir J. D. REES: Has the Anglo-Persian Oil Company any control over the price in this country?

Mr. KELLAWAY: I think not A contract has been in existence for some years.

Oral Answers to Questions — JAPAN (LAND PURCHASE).

Viscount CURZON: 2.
asked the Under-Secretary of State for Foreign Affairs whether British subjects are allowed to buy and own land and other forms of property in Japan?

The PARLIAMENTARY UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Cecil Harmsworth): Existing land laws are such that British subjects are debarred from buying and owning land in Japan. If "other forms of property" refers to mining rights or shares in certain domestic companies, the answer is in the negative. If, however, the Noble Lord refers to the ownership of houses, factories, warehouses and other premises on leasehold property, the answer is in the affirmative.

Viscount CURZON: May I ask whether Japanese subjects are subject to similar restrictions at Hong Kong?

Mr. HARMSWORTH: That is a question which ought to be addressed to the Colonial Office.

Oral Answers to Questions — PARLIAMENTS (HOURS OF SITTING).

Mr. CHARLES EDWARDS: 3.
asked the Under-Secretary of State for Foreign
Affairs to state the time of commencing business each day in the different Parliaments of Europe, America, Japan, South Africa and the British Colonies; the number of hours they sit each day; and the approximate time taken each year?

Mr. HARMSWORTH: I regret that the information required is not in my possession, but I will call for reports if the House so desire.

Mr. EDWARDS: How are we to know whether the House is desirous or not?

Mr. HARMSWORTH: I think I may put it more definitely and say that if my hon. Friend desires it, I will do what I can to meet his wish.

Sir J. D. REES: Will the hon. Gentleman throw in a few particulars regarding the climate, population and customs of the countries concerned?

Oral Answers to Questions — RUSSIA.

ITALIAN TRADE NEGOTIATIONS.

Mr. ALLEN PARKINSON: 4.
asked the Under-Secretary of State for Foreign Affairs whether negotiations are now proceeding between representatives of the Russian co-operative societies and the Government or private firms in Italy for the exchange of trade, and whether the vessels "Emma" and "Constantinople" have already arrived at Genoa from Odessa with produce from Soviet Russia?

Mr. HARMSWORTH: With regard to the first part of the question, His Majesty's Government have no definite information, but it is understood that an Italian Socialist Mission desires shortly to proceed to Moscow. We are making further inquiries. His Majesty's Government have no information regarding the second part of the question.

Lieut.-Commander KENWORTHY: Is the hon. Gentleman aware that if the Italians establish these relationships before us they are likely to obtain trade which British merchants would otherwise obtain? Will steps be taken to hasten negotiations for our people trading?

Mr. HARMSWORTH: As the hon. Member knows, those negotiations are now proceeding.

Lieut-Commander KENWORTHY: They can be hastened.

VLADIVOSTOK.

Mr. NEIL MACLEAN: 6.
asked the Under-Secretary of State for Foreign Affairs whether he can make a statement as to the position in Vladivostok; and whether His Majesty's Government has advised the Japanese Government against any attempt to overthrow by force the rule of the Russian Soviet Government in Eastern Siberia or any part of it?

Mr. HARMSWORTH: The answer to the first part of the question, according to the information which has reached us, is that as a result of disturbances which occurred at Vladivostok between 2nd and 4th April, certain positions in Vladivostok were occupied by Japanese troops on the evening of 4th April. The Zemstvo Government has been maintained in power. The answer to the second part of the question is in the negative,

BRITISH MILITARY MISSION.

Lieut.-Commander KENWORTHY: 9.
asked the Secretary of State for War whether there is still a British military mission in South Russia; and, if so, what are its functions?

The SECRETARY of STATE for WAR (Mr. Churchill): The greater part of the British Military Mission in South Russia has been withdrawn. There remains in the Crimea a small Mission, whose functions are to assist in the reorganisation of the army lately under General Denikin, and to keep the new commander-in-chief, General Wrangel, informed as to the progress of negotiations, which are being prosecuted through the British Foreign Office. It is not to be used in a combatant capacity.

Lieut. - Commander KENWORTHY: Are we to understand that these men are going to bolster up this military force in the Crimea, while another Mission is consulting with Russian representatives at Copenhagen for the resumption of trade?

Mr. CHURCHILL: Yes. The British Foreign Office has entered into negotiations with the Bolshevist Government in order to secure, if possible, the lives of the large number of Russian soldiers and refugees, officers, women and children, who are now huddled together in the
Crimea, and pending those negotiations we shall do all that is possible, through the agency of our Mission, to prevent the Crimea being overrun and all the people being massacred before the arrangements are completed.

Lieut. - Commander KENWORTHY: Can we take it that this Mission's functions are to organise purely defensive operations, and not again to incite the Russians to undertake offensive operations against their own countrymen?

Mr. CHURCHILL: The object of the Mission is to enable the forces, the troops, in the Crimea to hold out in the Crimea until some arrangement can be made which saves them from utter destruction.

Mr. J. JONES: Can the right hon. Gentleman state the name of the general in command? Is it Wangle?

Mr. CHURCHILL: Wrangel is the Russian general who succeeded General Denikin.

Mr. JONES: I thought Wangle was the name.

COMMUNIST CIRCULAR LETTER.

Sir F. HALL: 50.
asked the Lord Privy Seal if his attention has been called to the terms of the circular letter issued by the central committee of the Russian Communist party on the subject of the militarisation of labour and justifying the destruction of democratic institutions; and if the Government will consider as to taking steps to secure the widest possible publicity among all classes for this pronouncement of Russian Soviet policy?

Mr. BONAR LAW (Leader of the House): The answer to the first part of the question is in the affirmative, and as regards the last part, I would refer my hon. Friend to the reply given yesterday to a question by the hon. Member for Newcastle (North).

EGYPTIAN CIVIL SERVICE.

Mr. R. RICHARDSON: 5.
asked the Under-Secretary of State for Foreign Affairs what are the numbers of Egyptians and non-Egyptians in the Civil Service of Egypt; and what are the total salaries of each class?

Mr. HARMSWORTH: With the hon. Member's permission, I will circulate the answer in the OFFICIAL REPORT.

The following is the answer promised:

There are 25,020 pensionable or contract officials in the Egyptian Civil Service receiving salaries amounting roundly to 3,932,000 Egyptian pounds. Of these, Egyptians number 21,662, or 87 per cent., paid 2,823,000 Egyptian pounds, or 72 per cent. of the whole; British number 1,546, or 6 per cent., paid 732,000 Egyptian pounds, or 18½ per cent. of the whole. Other nationalities number 1812, or 7 per cent., paid 377,000 Egyptian pounds, or 9½ per cent. of the whole.

In addition, there are 76,809 monthly or daily paid employees, receiving salaries amounting to 2,408,000 Egyptian pounds. Of these, Egyptians number 75,739, or 98½ per cent., paid 2,300,000 Egyptian pounds, or 96 per cent. of the whole. British number 164, or ¼ per cent., paid 33,000 Egyptian pounds, or 1 per cent. of the whole. Other nationalities number 906, or l¼ per cent., paid 5000 Egyptian pounds, or 3 per cent. of the whole.

Oral Answers to Questions — BRITISH ARMY.

YORKSHIRE LIGHT INFANTRY (PTE. J. T. HOLMES LEES).

Mr. HANCOCK: 10.
asked the Secretary of State for War whether he can give or obtain any information concerning Private J. T. Holmes Lees, No. 37,205, King's Own Yorkshire Light Infantry, who was reported as missing on 18th September, 1918?

Mr. CHURCHILL: I regret that no further information has been received regarding this soldier. His death has now been accepted, and the relatives are being informed.

WAR MEDALS (DEPARTMENTAL POLICY).

Lieut. - Colonel W. GUINNESS: 11.
asked the Secretary of State for War whether he is aware that the Admiralty have authorised the issue of the British War Medal to all coastguards with 28 days of mobilised service; whether arrangements will now be made to issue this medal to all those who were mobilised during the recent War and borne on the strength of a recognised unit?

Mr. CHURCHILL: I would refer the hon. and gallant Member to the reply given on the 22nd March to the hon. Member for Paddington (North).

Lieut.-Colonel GUINNESS: Is the right hon. Gentleman aware that these coastguards worked during the War side by side with the home service troops, and that there is very much soreness because a large number of men who were prevented from going abroad on account of age were unfavourably dealt with as compared with Naval men?

Mr. CHURCHILL: It is true that the Admiralty and the War Office have taken different courses in regard to what I might call the non-combatant elements of the forces, but that must be accepted. The War Office policy is that the War medal is given, in the first instance, to those who went to the War. There are several millions of those. The issue of this medal will take two or three years for them, and I cannot regard it as an urgent matter at present to decide whether the War medal shall be extended to about 1,500,000 other persons who did not go to the War because they were unfit to take part in active operations. Certain I am that the claim of the fighting soldier must be considered in priority.

Lieut.-Colonel GUINNESS: Cannot the right hon. Gentleman anyhow allow these old men the pleasure of wearing the ribbon during the years they will have to wait for the medal?

Mr. CHURCHILL: I am not prepared at the present stage to pre-judge the question of the General Service Medal. Personally, after very grave consideration, I am entirely opposed to giving the same medal to the great mass of men who never left this country as we give to the men who fought.

Viscount CURZON: May I ask whether it is not a fact that a great many of the coastguards actually served with the Fleet at sea?

Major Earl WINTERTON: In view of the serious admission that the War Office and the Admiralty have a different policy in the issue of these medals, may I ask whether a chance will be given, and on what Vote, to discuss the action of both Departments? Is the right hon. Gentleman aware that the giving of the medal to these coastguards will cause very great
discontent among a large number of men in the Army?

Mr. CHURCHILL: Hard cases do not make good law. The Admiralty have to deal with a problem infinitely smaller, in a numerical sense, than that of the War Office. The small number of Naval men who get the medal who would not get it if they were in the Army, is no guide to what would happen if the 1,500,000 men, who on military grounds made a similar claim, were included

Earl WINTERTON: Will the right hon. Gentleman approach the Leader of the House with the view of having this matter discussed—the different policies of the Admiralty and the War Office? The right hon. Gentleman may smile, but it is a most serious matter.

Mr. CHURCHILL: Surely it is no part of my business to approach the Leader of the House with a view of inaugurating a Debate in criticism of the policy of the Government.

OFFICERS' PAY.

Captain COOTE: 14.
asked the Secretary of State for War whether he is aware that a number of Royal Air Force officers holding temporary, as distinct both from permanent or short-service, commissions are being retained as indispensable upon the Inter-Allied Aeronautical Commission of Control to Germany owing to their technical or linguistic attainments; that these officers are receiving only the old rates of pay, which means, in the case of captains, 15s. 6d. per day as against 29s. (new rate, and in the case of lieutenants, 11s. 6d. per day as against 25s.; and, in view of the fact that officers of other arms of the service similarly retained are drawing the new rates, whether he will take steps to extend them to Royal Air Force officers?

Mr. CHURCHILL: The facts are as stated in the first and second parts of the question, except that the difference between the old and the new rates is actually smaller than my hon. and gallant Friend suggests. The matter has recently been under review, and I am able to say that a decision has been reached which will give relief to the officers concerned. The details are not yet worked out, but an announcement will shortly be made.

Captain COOTE: 15.
asked the Secretary of State for War whether he is aware that the rates of subsistence allowance paid by the German Government to officers of the Inter-Allied Commission of Control were fixed when the rate of exchange was about 80 marks to the £; that the exchange has now fallen to over 200 marks to the £; and that in consequence the allowances are quite inadequate; and whether he can secure a revision of the rates so that the German Government should pay these officers a sum sufficient to cover their living expenses?

The FINANCIAL SECRETARY to the WAR OFFICE (Sir A. Williamson): These allowances are to meet local expenditure and are fixed in local currency, not in sterling. They do not, therefore, depend directly upon the mark exchange. They are revised from time to time in accordance with the cost of living in Germany, and such a revision is now in progress.

Captain COOTE: Is the right hon. Gentleman aware that with the present rate of exchange the amount of subsistence allowance is totally inadequate?

Sir A. WILLIAMSON: No doubt that is a fact to be taken into account.

Captain COOTE: When will the decision be taken?

Mr. COWAN: 18.
asked the Secretary of State for War whether a general routine Order of the British Expeditionary Force laid down a special allowance of nine francs per day for officers stationed at Antwerp; whether such Order has been cancelled and, if so, on what date; whether such cancellation has any retrospective effect; whether the base commandant at Antwerp has authority to cancel or vary such Order; if not, will he take steps to annul a distinction made by the base commandant between officers allowed to live in the town and those compelled to live in the embarkation camp, seeing that the expenses of living were approximately the same in both cases, while officers living in town were much better housed and lived generally under much more comfortable conditions; whether, among the officers quartered in the said camp, certain Royal Army Service Corps officers have obtained payment of the special allow-
ance while others in identical circumstances have been hitherto refused payment; and, if so, will he take steps to ensure that the latter class receive proper consideration, regard being had to the depreciation of the franc since the allowance accrued?

Sir A. WILLIAMSON: As I informed the hon. Member for Dundee on Thursday last, I am making inquiries into this matter.

Captain LOSEBY: 24.
asked the Secretary of State for War whether he is aware that, previous to the publication of Army Order 324 of 1919, an officer of the quartermaster class who had been in receipt of the rate of pay for 20 years' commissioned service under Article 238 of the Royal Warrant had to forgo this rate and draw the rate for 15 years' commissioned service, owing to the wording in Table II of the Army Order in question being altered from 20 years' commissioned service to when specially promoted lieutenant-colonel; and, if so, whether, in view of the wording of the last paragraph of Article 241 of the Royal Warrant, which has since been cancelled by Army Order 90, dated 12th March, 1920, it was the intention to deprive an officer of this class from drawing a rate of pay which had been previously awarded him for service in the field during the War?

Sir A. WILLIAMSON: The effect of Army Order 324 upon a quartermaster of 15 years' actual service is that he draws a rate of pay of 30s. a day. There is no higher rate for length of service. On the old scale, if he had been specially advanced to the rate for 20 years' service in recognition of service in the field, he drew 15s. The hon. and gallant Member will see that there is no question of depriving such an officer of anything.

Lieut.-Colonel J. WARD: Is the right hon. Gentleman aware that this Order sometimes results in a reduction of pay, and I can give him particulars of a case?

Sir A. WILLIAMSON: If the hon. and gallant Gentleman will give me the particulars I will have inquiry made.

WAR GRATUITIES.

Mr. C. EDWARDS: 20.
asked the Secretary of State for War why no war gratuity has been paid to ex-Private J. Williams, No. 34, Welsh Guards; if he is aware that
this case was placed before the War Office months ago and no satisfaction given and no reason for delay; and will he cause immediate inquiries to be made with a view to settling the matter?

Sir A. WILLIAMSON: Inquiries are being made, and I will let the hon. Member know the result in due course.

Colonel YATE: 23.
asked the Secretary of State for War whether, considering that re-employed officers during the War who were in the enjoyment of retired pay have had this pay re-assessed under the terms of paragraph 5, Table XVI, Army Order 324, officers who originally retired on a gratuity and who were also reemployed during the War should equally have their gratuities re-assessed and a distinction between two categories of recalled officers thus removed?

Sir A. WILLIAMSON: I would refer the hon. and gallant Member to the reply given on the 16th December last to the hon. and gallant Member for Finchley, to which I have nothing to add.

Colonel YATE: Does that mean that the case of these officers will be considered or not considered?

Sir A. WILLIAMSON: I cannot add anything to the previous answer.

Colonel YATE: Can the right hon. Gentleman say what was the previous answer?

PROFICIENCY PAY.

Lieut. - Colonel ARCHER - SHEE: 21.
asked the Secretary of State for War whether he is aware that serving soldiers recently reclassified for proficiency pay have been debarred in certain cases from receiving such proficiency pay owing to the fact that they do not reach the required standard of physical efficiency owing to wounds, etc., directly contracted on active service and entirely beyond their control; and whether he will direct that paragraph 686 of King's Regulations is to be interpreted so as to include all men who, whilst admittedly proficient in every other way, are temporarily classified in category B 2 or under?

Sir A. WILLIAMSON: Physical efficiency is one of the essential conditions governing the grant of proficiency pay, and I regret that no relaxation can be permitted.

Lieut.-Colonel ARCHER-SHEE: May I ask whether further consideration may not be given to this question, and surely it is very unfair to fine these soldiers in their pay for wounds and sickness which have been incurred in service?

Sir A. WILLIAMSON: I am afraid I cannot give a further answer.

TEMPORARY PROMOTION (ARMIES OF OCCUPATION).

Captain LOSEBY: 25.
asked the Secretary of State for War whether any temporary promotions of officers serving with the Armies of Occupation have been made under the provisions of Army Order 286 of 1919; and, if not, whether it is intended to make any such temporary promotions.

Mr. CHURCHILL: It is not now proposed to make any temporary promotions under the Army Order mentioned. In order to make such promotions, it would be necessary to withdraw the grant of acting rank to officers serving with units of the Armies of Occupation. As personnel is continually changing and units are rapidly disappearing, acting appointments are more suitable to the requirements of the Armies of Occupation than the more permanent system of temporary promotion. Acting rank gives the rank to the individual on the spot performing the duties of the higher rank, while temporary promotion would be by seniority on a regimental or corps roster; e.g., a vacancy in a battalion on the Rhine might have to be filled by the promotion and transfer to the Rhine of the next senior officer on the roster, who might be serving in Mesopotamia.

RELEASE APPLICATIONS.

Mr. N. MACLEAN: 26.
asked the Secretary of State for War whether he is aware that Private Alexander Campbell, No. 64,591, B Company, 6th Platoon, 1st Cameronians, Gough Barracks, Curragh, who enlisted on 3rd September, 1919, will not be 18 until 3rd June, 1920; whether his mother has written asking his release; and whether he will take steps to order the release from the Army of this boy.

Mr. CHURCHILL: My attention had not previously been drawn to this case, but if he application for the soldier's release is made solely on account of his age, he will be held to serve, provided his enlistment was in order. I am, how-
ever, having inquiries made and will let the hon. Member know the result.

ARMY (COURT OF INQUIRY) ACT, 1916, CASE No. 2.

Brigadier - General Sir OWEN THOMAS: 28.
asked the Secretary of State for War whether all the reasons against the publication of the evidence in the Army (Court of Inquiry) Act, 1916, Case No. 2, are now obsolete; and, if so, will he now give instructions for the publication of same at an early date.

Mr. CHURCHILL: I see no reason to depart from the decision of my predecessors that no good purpose would be served by the publication of the evidence in this case. The findings of the Court of Inquiry were published in Command Paper 8435, which was presented to Parliament on the 22nd December, 1916.

Sir O. THOMAS: Can the right hon. Gentleman consider that portion of the evidence relating to the cross-examination of Lord French.

Mr. CHURCHILL: I have no particular portion of the evidence in mind, but I am advised there is no new ground on which the decision of my predecessors should be altered at present.

Sir O. THOMAS: I am not asking for any new ground, but that the evidence should be published. If the right hon. Gentleman will not give authority to publish it, why not?

Mr. CHURCHILL:: The decision hitherto has been that the evidence should not be published, and no new ground has arisen to lead to that decision being reversed.

Sir O. THOMAS: Is the right hon. Gentleman aware that it was intended to publish this after the War, and that it could not be published during the War owing to certain statements put forward in the course of the evidence, but now there is nothing to prevent publication?

Mr. CHURCHILL: As I say, I see no reason to alter the decision of my predecessors.

Sir E. HUME-WILLIAMS: Is it not the fact that this is a matter of purely private interest, and is now entirely forgotten, and is it not wholly undesirable to re-open it?

ARMY OF THE RHINE.

Colonel BURN: 29.
asked the Secretary of State for War if some of the British regiments composing the Army of the Rhine are so short of men that German civilians are attached to the companies to perform the duties of batmen, clerks, etc?

Mr. CHURCHILL: I have called for a report on this question, and will write to the hon. and gallant Member in due course.

Colonel ASHLEY: Will the right hon. Gentleman in his inquiry find out also about telephone operators?

Mr. CHURCHILL: I will make that inquiry, but it certainly would not astonish me if some assistance has been derived from the local population. I confess what astonishes me is that we are able to carry on at all under the conditions.

Colonel ASHLEY: Is it not rather unwise to use the civilian population in an area we occupy to work the telephone between high military officers?

Mr. CHURCHILL: I have not said such a thing had taken place. I am quite satisfied that the best arrangements possible are being made, although I am not certain what those arrangements are until I inquire.

Mr. PALMER: Would the right hon. Gentleman consider the propriety of using the services of ex-soldiers who are in an impoverished condition in England to-day?

SOLDIER'S DEATH AFTER DISEMBARKATION, DEVONPORT.

Lieut.-Colonel MURRAY: 30.
asked the Secretary of State for War and Air why Second-corporal James Munro Selbie, No. W.R. 288,177, R.O.D., Royal Engineers, who, after disembarkation from H.M.S. "Czaritza," died at Devonport on 8th February from influenza and double pneumonia, and whose temperature on the arrival of the "Czaritza' at Gibraltar was 103.4, was not taken off the ship at Gibraltar and sent to hospital for treatment; and whether, in view of his gradually rising temperature, his chances of recovery would have been greater had he been so disembarked?

Mr. CHURCHILL: I have no specific information as to the reason why Lance-Corporal Selbie was not disembarked at Gibraltar. From the reports received, however, it appears that until after leaving Gibraltar the case was one of uncomplicated influenza, and as such would not ordinarily be taken off a ship en route since adequate provision for treatment exists on board. I am advised that there is no reason to suppose that the complications which unfortunately led to this soldier's death would not have supervened at or about the same period, even though he had been disembarked at Gibraltar.

Lieut.-Colonel MURRAY: Is the right hon. Gentleman quite satisfied that there was no negligence on the part of the senior medical officer on board?

Mr. CHURCHILL: I am so advised. It is, of course, a matter in which I have to go by the advice given me. I have certainly seen no ground for assuming that there was negligence.

MILITARY UNIFORMS.

Lieut.-Colonel JAMES: 34
asked the Financial Secretary to the War Office (1) whether pre-War military dress is to be re-introduced into the Army; if so, whether he is able to state the estimated cost of such clothing for each arm of the service, without taking into account" existing stocks of cloth contracted for at pre-War rates and actually in the possession of the military authorities;
(2) Whether, in the event of officers being ordered to purchase and wear uniforms of pre-War patterns and material other than khaki, the War Office intends to pay an adequate outfit allowance to those compelled to purchase such outfit; whether a maintenance allowance for the periodical renewal of such uniform will be paid and, if so, the amount of such allowances for the different branches of the service; and whether he is able to state the average cost of a complete full-dress uniform under present conditions if such uniform is purchased from one of the recognised military tailors and outfitters?

Sir A. WILLIAMSON: The whole subject is still receiving careful consideration, and I regret that I cannot at present make any announcement on the matter.

PRISONERS OF WAR.

Mr. A. DAVIES (Clitheroe): 16.
asked the Secretary of State for War whether hi attention has been drawn to the alleged sufferings of prisoners of war from Ahmednagar, who are now in Egypt; whether he is aware that on the 12th January last H.M.S. " Main," coming from India with prisoners of war, passed through Port Said and, as an epidemic of influenza had broken out on board, the sick and a number of others were landed on the plea that the ship was overcrowded; that these men had already had 5½ years of captivity and for two months' have lived in a concentration camp, hastily organised, in the desert; that they are living eight men in a small tent, with bad accommodation, suffering from the heat by day and the cold by night; and whether he will have immediate inquiry made into the matter?

Mr. CHURCHILL: I am informed that the s.s. "Main" arrived at Port Said on the 13th January from India with about 1,800 Germans on board, and on account of a serious outbreak of influenza was compelled to land and segregate 70 officers and 400 other ranks, and in addition to-remove 150 to hospital. The "Main" left Port Said for Germany on the 19th January with the remainder, leaving-about 700 at Port Said who, according to a report dated the 24th March received from Egypt, were accommodated in the transit camp and were made as comfortable as the temporary nature of their stay permitted. The report further stated that their health was at that date good, but the disappointment entailed by their removal from the "Main" and the several occasions on which re-embarkation had been postponed had naturally caused some discontent. They eventually sailed from Port Said on the 27th March and should arrive at Hamburg in a few days' time. A further report has been called for with regard to the statements made in the latter part of the question, and I wilt in due course let the hon. Member know the result.

Oral Answers to Questions — PEACE TREATIES.

GERMANY.

Lieut.-Colonel Sir F. HALL: 31.
asked the Secretary of State for War and Air, if, as the result of the long period which elapsed between the time of the Armistice
and the visits paid by the Allied Aeronautical Commission to the aeroplane and motor works and aerodromes in Germany, the Germans were enabled to secrete a large quantity of important aircraft material and machinery; and what action is proposed to be taken to deal with the position thus created.

Mr. CHURCHILL: If my hon. and gallant Friend has any information which bears out the suggestion contained in his question, I shall be glad if he will communicate it to me, but he can rest assured that the Inter-Allied Aeronautical Commission of Control is taking all possible measures to see that the terms of the Treaty in regard to the surrender of aeronautical material are fully carried out.

Sir F. HALL: May I ask when the Allied Commission made their inspection? Was it immediately after the Armistice, and did they succeed in finding the jigs and dies for new classes of aeroplanes?

Mr. CHURCHILL: The arrangements under which the disarmament of Germany is carried out are set forth fully in the Peace Treaty, and should be studied there. So far as those arrangements permit us to act, we have been acting with the utmost energy, and shall continue so to act, but I must ask for detailed notice if I am to give an answer in regard to the actual provisions of the Treaty.

Sir F. HALL: Does not the right hon. Gentleman recognise the fact that if inspection was not made as soon as it was possible for it to be made, the Germans could do away with all the processes for new aeroplanes? Does he recognise the importance of that, so far as this country is concerned, with regard to the jigs and dies?

Mr. CHURCHILL: Of course, the whole question of the manufacture of commercial aeroplanes is very closely allied to the question of the manufacture of war aeroplanes. They are permitted under the Treaty to manufacture commercial aeroplanes.

Oral Answers to Questions — NAVAL AND MILITARY PENSIONS AND GRANTS.

EX-WARRANT OFFICERS.

Lieut.-Colonel Sir J. HOPE: 32.
asked the Secretary of State for War and Air
whether he is aware that regular warrant officers and non-commissioned officers who were in 1914 serving on the permanent staff of territorial units, and who were during the War promoted to the rank of officer, have in most cases been compulsorily demobilised without the option of reverting to their pre-war rank and conditions of service, and that thereby those officers lose their pre-war rights of serving on in the ranks for increased pension without the compensating advantage of officer's pension on retirement which has been given to those promoted in regular or service units; and whether he will remedy this injustice to those who were pressed to accept commissions for the benefit of the service?

Sir A. WILLIAMSON: It would assist me in considering this question if the hon. and gallant Member would communicate to me particulars of the cases he has in mind.

PENSIONS (COMMUTATION).

Colonel ASHLEY: 33.
asked the Financial Secretary to the War Office if he can now state whether any decision has been arrived at in regard to the revision of rates for commutation of pension by warrant officers and men to bring them into line with the rate for officers; and, if so, whether the conditions under which pensions can now be commuted are available?

Sir A. WILLIAMSON: The rates have not yet been revised. Pensions can be commuted now, and the conditions are set out in the Pay Warrant.

NEWCASTLE WAR PENSIONS COMMITTEE (SECRETARY).

Colonel ASHLEY: 43.
asked the Pensions Minister whether he is aware that the Newcastle War Pensions Committee has quite recently appointed a gentleman who has not served in His Majesty's Forces as their secretary; and whether he will state what action he proposes to take in the matter?

The PARLIAMENTARY SECRETARY to the MINISTRY of PENSIONS (Major Tryon): The appointment referred to was recently submitted for confirmation in accordance with the Regulations, but approval has been withheld, and the local committee have been asked to report as to the steps taken to give preference to
ex-service candidates. Their report has not yet been received.

MECHANICAL LIMBS.

Mr. A. DAVIES: 44.
(Clitheroe)
asked the Pensions Minister whether he can state the number of pensioners in the north-western region who have sustained leg amputations, and the number of arm amputations; how many have been supplied with mechanical limbs; the cost to maintain them in repair prior to the supply of the second mechanical limbs; and whether he can state how many cases have been supplied with a second mechanical limb?

Major TRYON: The number of pensioners in the north-western region with leg and arm amputations respectively are 3,550 and 1,500. All of these pensioners have been fitted with artificial limbs. In addition, there are about 140 serving soldiers who are not yet ready to be fitted. The cost of maintaining the limbs in repair, both prior to the supply of the second artificial limb and after, is borne by the Ministry of Pensions. The issue of second limbs has been proceeding steadily since last October, but I am unable to state how many of the pensioners now supplied with them reside in the north-western area.

ROYAL SCOTS LABOUR COEPS.

Mr. N. MACLEAN: 59.
asked the Minister of Pensions whether he is aware that Mrs. Dolan, widow of Private Frank Dolan, 3rd battalion Royal Scots Labour Corps, received a form to fill up from the local War Pensions Committee, and that this was duly filled up and returned three months ago; whether he can state the reason why no reply has been made; and when this widow is likely to receive her pension?

Major TRYON: As the hon. Member is aware, the Ministry have found Mrs. Dolan to be ineligible for the award of pension. She has exercised her right of appeal, and the papers have now been passed to the Tribunal who will inform Mrs. Dolan when the case is due for hearing.

Mr. MACLEAN: Can the hon. Gentleman answer that part of the question dealing with the paper filled up three months ago and to which no reply has yet been made?

Major TRYON: It seems to me obvious from my answer that Mrs. Dolan knew what the answer given was, and that she has exercised her right of appeal.

Oral Answers to Questions — TRANSPORT.

STREET TRAFFIC (NOISES).

Major GLYN: 36.
asked the Secretary of State for the Home Department whether there is any power invested in the Metropolitan police to prohibit vehicles, either steam or petrol, that move through the streets causing unnecessary noises that disturb people in their houses and alarm horse traffic?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): The police enforce the Regulation, which requires a motor car to be provided with an efficient silencer for exhaust gases and the Regulation which forbids the noisy running of the machinery of a stationary vehicle. With these exceptions the police have no power to deal with vehicles which case unnecessary noise.

Major GLYN: Is the right hon. Gentleman aware that owing to the need of transport a large number of steam vehicles are being used, which cause fright to horses in the streets, and that accidents thus occur?

Mr. SHORTT: I have not had that brought to my notice.

Lieut.-Colonel MURRAY: Is he aware that only yesterday a motor car with an open cut-out passed close by a policeman, who took no notice of it whatever? I was there myself and saw it.

Mr. SHORTT: If the hon. and gallant Gentleman will let me know the circumstances, I will inquire.

Sir H. BRITTAIN: At what particular stage of intensity does a noise become "unnecessary"?

Mr. SHORTT: That is a matter of individual taste.

LICENSED TAXI-CABS AND MOTOR OMNIBUSES, LONDON.

Mr. GILBERT: 41.
asked the Home Secretary if he will state the number of taxi-cabs which have been licensed by the Metropolitan police for the present year; and how the number compares with the number licensed in the year 1914?

Mr. SHORTT: The number of taxi-cabs licensed during the year ended 31st March, 1920, was 5,716. The number of taxi-cabs licensed during the year ended 31st March, 1915, was 7,251.

Mr. GILBERT: 42.
asked the Home Secretary if he will state the number of motor omnibuses licensed by the Metropolitan police for the present year; what was the number licensed for the year 1914; and will he state if any of the new larger type of omnibus has been licensed this year and, if so, how many up to date?

Mr. SHORTT: The number of omnibuses licensed during the year ended 31st March, 1920, was 3,316. The number of omnibuses licensed during the year ended 31st March, 1915, was 2,771. No new omnibuses of the larger type have been licensed this year. Two were licensed in 1919.

FEDERATED SHIPBUILDING YARDS (WAGON SHORTAGE).

Brigadier-General SURTEES: 74
asked (1) the Minister of Transport whether he is aware that the whole of the federated shipbuilding yards on the North-East Coast have had their building programmes seriously disorganised owing to the difficulty of obtaining adequate supplies of steel plates, angles, and other materials, due to the shortage of wagons; and that Messrs. W. G. Armstrong, Whitworth, and Company, Limited, have received at their naval yard during the last six months less than 60 per cent. of their promised weekly deliveries of steel plates, and have in consequence been obliged to send platers and helpers home almost every day; whether the conditions in the Wear and Tees and Hartlepool ship-building yards are similar to those existing on the Tyne; whether, seeing that the shortage of wagons is restricting output, causing unemployment and creating dissatisfaction and unrest in consequence of firms having to discharge men, put them on short time, or lay them idle until the arrival of material, he can take steps to rectify this;
(2) whether he is aware that there is an accumulation on the North-East Coast of plates and sections approximating to 70,000 tons, and that not only the whole of this could be loaded, if sufficient wagons were available, but that the out-
put of plates and sections could also be increased by at least 200,000 tons per annum by putting mills into operation which are not now working and cannot be worked owing to the shortage of wagons; whether he will take steps to induce the railway companies to provide proper and sufficient vehicles for transport of materials, and also to put men on three shifts, not only at terminal stations, but on the mineral traffic generally, and thus utilise night time for traffic, and as a result give employment to additional men;
(3) whether he is aware that a conservative estimate of the loss in tonnage output of the North-East Coast finished steelmakers is 725,000 tons per annum (approaching £15,000,000 in turnover) and that this is due to the inadequate supply of the right type of wagons; and whether, having regard to the admitted inability of the present supply of railway transport to cope with the finished steel output of the North-East district, he will assist the North-Eastern Railway to obtain the number of trucks necessary to deal with not only a full output of the existing plate mills, but also with the new output represented by mills now in course of construction and nearing completion?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Mr. A. Neal): I am aware of the accumulated stocks at the steel works on the North-East Coast and of the difficulties of the shipbuilding firms in that area in obtaining supplies of steel plates, etc. As the hon. and gallant Member indicates, the problem is one of shortage of the special trucks required for the bulk of this traffic. The North-Eastern Railway Company, with the assistance of the other railway companies and the Ministry of Transport, are doing all that is possible to increase the supply of trucks. They have borrowed a number of bolster wagons, and more cannot be lent without causing a shortage in other districts. Special priority has been given to the construction of about 1,400 bolster and plate wagons on order by the North-Eastern Railway Company. Continuous working already exists on important lines and branches, and elsewhere the hours are increased wherever this is necessary and practicable.
The situation in the North-East Coast steel works is receiving constant attention by the Ministry, and the matter is
to be discussed at a meeting with the steel makers and the railway company to-morrow morning, to which I have invited hon. Members who are particularly interested in the subject.

Mr. TURTON: Is it not a fact that the North-Eastern Railway Company have placed these large orders with different wagon manufacturers, and they cannot get delivery; therefore does not the fault, if any, rest with the manufacturers?

Mr. NEAL: I cannot find any ground for thinking that the North-Eastern Railway Company are at fault in this matter.

Mr. RENWICK: Is it not a fact that a large number of these wagons were sent to France, and are still there, and can they not be brought back?

Mr. NEAL: A certain number were sent to France, and I believe that nearly the whole of them have now been returned.

Mr. A. SHORT: Will the hon. Gentleman see that more orders are given for new wagons so that more of the unemployed and ex-service men may be provided with work?

Mr. RENWICK: Will the hon. Gentleman make inquiries as to whether these wagons can be brought home and how many are still in France?

Mr. NEAL: I shall be glad to do so.

LONDON TRAFFIC (LEGISLATION).

Sir F. HALL: 77.
asked if the Government intends to secure the passage during the present Session of Parliament of a Measure to set up a traffic authority on the lines recommended by their Advisory Committee on London Traffic.

Mr. NEAL: I cannot do better than refer the hon. and gallant Member to the reply given to the hon. Member for Central Southwark on the 12th instant.

Sir F. HALL: No answer was then given to the question. Are we to understand that the usual practice as regards the recommendations of the London Traffic Committee has been followed and their recommendations have been pigeonholed?

Mr. NEAL: No, my hon. and gallant Friend must not understand that.

Sir W. JOYNSON-HICKS: Does the hon. Gentleman not realise that the whole question of London traffic is being held up pending a decision in regard to this important Report?

Mr. NEAL: We are considering the question. We hope there will be no further delay, but the Cabinet is very much overworked at the present moment.

Sir F. HALL: Does the hon. Gentleman realise the enormous loss in connection with the congestion of the London streets, and will he press upon the Cabinet the urgent necessity for action being taken forthwith?

Mr. NEAL: That is a matter for the Leader of the House.

POLICE (MEMBERSHIP OF SECRET SOCIETIES).

Lieut.-Colonel GUHNNESS: 37.
asked the Home Secretary whether he is aware that recruits for the police force in Carnarvonshire are debarred from belonging to any secret society except that of the Freemasons; whether he is aware that this restriction operates to the detriment of the Royal Antediluvian Order of Buffaloes and other societies which are doing admirable work of a philanthropic character; and whether he will take any steps to put all philanthropic secret, societies in the same privileged position as that occupied by the Freemasons?

Mr. SHORTT: ; I understand that one of the conditions of service in the Carnarvonshire Police is as stated. The conditions are laid down by the County Police Authority, but I will bear the hon. and gallant Member's point in mind if any general Regulation is made on the subject.

Lieut.-Colonel GUINNESS: Is it not just as objectionable for the R.A.O.B. there that these regulations should be applied in one county as if they were applied generally?

Mr. SHORTT: Each county makes its own regulations.

Mr. J. JONES: Will the right hon. Gentleman draw this fact to the attention of the Prime Minister, who comes from that county?

Oral Answers to Questions — IRELAND.

INTERVIEW WITH LORD-LIEUTENANT.

Sir O. THOMAS: 39.
asked the Home Secretary if his attention has been drawn to the fact that a London daily newspaper is asserting day by day the truth of an interview with the Lord-Lieutenant of Ireland, which the Lord-Lieutenant has repudiated; and whether he intends to prosecute the proprietor and editor of the newspaper under the Defence of the Realm Regulations or otherwise?

Mr. SHORTT: I have seen the assertions referred to, but I am not aware of any Defence of the Realm Regulation or other provision of the law under which a prosecution could be instituted.

Sir O. THOMAS: Is the right hon. Gentleman aware that this newspaper, the "Daily Express," can prove the truth of its assertions, and does the Government think that Lord French's character is not worth defending?

Mr. SHORTT: I have already said I know of no process of law by which I can institute proceedings.

Mr. PALMER: Is it not open to Lord French to take action in the matter?

Mr. SHORTT: I have not considered that.

Mr. MacVEAGH: He will not do it.

METROPOLITAN POLICE.

Mr. GILBERT: 40.
asked the Home Secretary if he will state the present number of men in the Metropolitan Police Force; if this is the maximum number required by the Force; and will he state the total number of recruits accepted since the Armistice was signed, and what proportion of these recruits are ex-Service men?

Mr. SHORTT: The Metropolitan Police Force at present numbers 20,569 men. It is still below its authorised strength, and there are vacancies for 1,160 men. Since the Armistice 4,571 recruits have been accepted, and of these recruits 99½ per cent. are ex-Service men.

Mr. J. JONES: Will the right hon. Gentleman consider hard cases of men who were discharged from the Force in consequence of the late strike?

HON.MEMBERS: No. no!

Mr. SHORTT: I do not think that arises out of this question.

Oral Answers to Questions — GERMANY.

KAPP MILITARY COUP.

Lieut.-Commander KENW0RTHY: 45.
asked the Prime Minister whether his attention has been drawn to the numerous statements on the Continent that promises of support were given by certain representatives of His Majesty's Government in Germany to the instigators of the Kapp military coup, and in particular to the statements of Count Reventlow to that effect; whether, in view of these statements and the consequent uneasiness in France, he can give a denial to them; and when the Government intend to give an explanation of their recent policy towards Germany to the House of Commons?

Mr. BONAR LAW: The reports referred to are without any foundation whatever, and His Majesty's Government would view with disfavour any attempt to re-establish a militarist regime in Germany. With regard to the last part of the question, I can add nothing to the statements already made in the House.

Lieut. - Commander KENWORTHY: May I ask, with reference to the last part of the question, whether he will give an undertaking that an opportunity will be given by the Government to discuss this matter as soon as some decision has been come to at San Remo on this very important subject?

Mr. BONAR LAW: I do not know exactly what subject the hon. and gallant Gentleman means. If he refers to the exchange of Notes between His Majesty's Government and the French Government, I think it is possible that the Government and the House too might agree that it is better it should not be discussed.

Lieut.-Commander KENWORTHY: Are we to take it from that that we are to have no opportunity at all to discuss this matter?

Mr. BONAR LAW: I have already explained many times to the House that it rests with the House, and so far I have found the House agrees with the Government in the matter.

INTERNATIONAL POLICE.

Mr. LAWSON: 46.
asked the Prime Minister whether proposals have been put before His Majesty's Government, or any Department of it, with a view to the creation of an international corps of police, which is to include mobile sections able to operate in any country; and what action has been taken with regard to the proposals?

Mr. BONAR LAW: The answer to the first part of the question is in the negative; the second part does not therefore arise.

EGYPT (MILNER COMMISSION REPORT).

Mr. LAWSON: 47.
asked the Prime Minister whether he can now state when the Report of the Milner Commission to Egypt will be published?

Mr. HARMSWORTH: I would refer the hon. Member to the reply which I gave on 23rd March to the question put by the hon. and gallant Member for East Leyton.

POLAND (REFUSAL OF PASSPORTS).

Lord ROBERT CECIL: 48.
asked the Prime Minister whether he is aware that passports have been refused to Miss Evelyn Sharpe and Mr. Arthur Watts, British subjects, who are anxious to proceed to Poland in connection with the work of the Society of Friends in fighting the typhus epidemic there raging; what Office or Department is responsible for these refusals; and what are the reasons for this action?

Mr. BONAR LAW: It is true that the applications in question have not yet been granted by the Passport Office, which acts on instructions received from the Foreign Office upon the advice of the Home Office after consultation with them. These cases are under consideration, and a final decision has not been taken. If my Noble Friend will repeat the question on Monday, I shall be able to give him an answer.

Lord R. CECIL: Is my right hon. Friend aware that these applications have been pending for a very long time, and that these persons are anxious to proceed
on a philanthropic duty of great danger to themselves, and it is a great discouragement to everyone concerned that there-should be a difficulty raised about their passports?

Mr. BONAR LAW: I looked into the subject on account of the question of my Noble Friend, and I am told it will be-decided this week.

Colonel ASHLEY: Is there any suspicion as to the bona fides of this lady and' gentleman?

Mr. BONAR LAW: I have not sufficient knowledge to give any details.

Oral Answers to Questions — CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).

CARLISLE RESTRICTIONS.

Major LOWTHER: 49.
asked the Prime Minister whether he has received resolutions passed by the Carlisle Working: Men's Club and Institute and from the Carlisle Liberal Club and Institute calling upon the Government to take whatever steps are necessary for the cancellation of. the Order issued by the Central Control: Board (Liquor Traffic), dated 12th February, 1920; and whether he will see that the people of Carlisle and district are not subjected to any restrictions which do not' apply to the rest of England?

Mr. BONAR LAW: Resolutions in the terms described have been received from several of the existing registered clubs in-Carlisle. None of these clubs are affected: by the Order, and the House will understand that it would be impossible to abolish the direct control of the sale and supply of intoxicating liquor, which has been established in Carlisle, in advance of the pending legislation.

Mr. INSKIP: Is the right hon. Gentleman aware that the Order overrides the-statutory power of the magistrates to grant a new licence? Has the right hon. Gentleman considered whether the Order is legal?

Mr. BONAR LAW: I have not gone into details, but, of course, the Carlisle area is, as the House knows, in a special: position.

Sir J. D. REES: Have any representations in favour of such action been received
even from the subjects of these experiments at Carlisle?

Mr. BONAR LAW: I am afraid I cannot answer that question, but I have been informed that on the whole the people of Carlisle are very well satisfied.

Major LOWTHER: Is my right hon. Friend aware that there is a great feeling in Carlisle and North Cumberland that there is no reason to treat Carlisle and that particular district differently from any other district in the country?

Mr. BONAR LAW: Very probably both sets of opinion exist.

Sir J. D.REES: Does the right hon. Gentleman know that the content to which he testifies is not that to which they give expression to the casual traveller passing by?

POST OFFICE SAVINGS BANK (RATE OF INTEREST).

Mr. R. YOUNG: 51.
asked the Chancellor of the Exchequer whether he will favourably consider, for the purpose of encouraging thrift among weekly wage earners, increasing the amount that can be deposited in the Post Office Savings Bank, and also, for the same purpose, an increase in the rate of interest now paid to depositors or an increase in the rate of interest on any amount over £20?

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): There is at present no limit on the amount which may be deposited in the Post Office Savings Bank, and in the Savings Banks Bill recently introduced power is being sought to continue the waiver of the limit. With regard to the last part of the question, I would refer to the answer given by my hon. Friend the Financial Secretary on 15th April to my hon. Friend the Member for Oxford.

Sir F. HALL: Does my right hon. Friend recognise the fact that a number of depositors place their money in the Savings Bank because they have not, or do not know of, any other facilities? Does he not think the time has arrived when these depositors should receive a more adequate return on their savings?

Mr. CHAMBERLAIN: No, Sir. It raises a question which the right hon.
Gentleman answered the other day to which I referred a moment ago. There is less reason I think than ever there was before for increasing the rate allowed on deposits in the Post Office Savings Bank, because there are now other forms of investment convenient for and open to the small investor which he can adopt if he wish, and which would give him a higher rate of interest. It must be remembered that money deposited in the Post Office Savings Bank is money at call.

Sir F. HALL: But does my right hon. Friend not recognise the fact that many of these people are saving up their shillings, and should be encouraged in their thrift, and on what grounds do the Government justify their action in declining to give reasonable interest to those people who save up their money in this small way?

Mr. CHAMBERLAIN: The people to whom my hon. and gallant Friend refers can put their shillings in War Savings Certificates, and obtain 5 per cent. Under those circumstances, I see no reason to change the rate of interest on deposits in the Post Office Savings Bank.

Sir F. HALL: But does the right hon. Gentleman recognise that they cannot get their money out at call?

Mr. CHAMBERLAIN: They can.

LOANS TO ALLIES.

Lieut.-Commander KENWORTHY: 52.
asked the Chancellor of the Exchequer whether he will give details of Item A, Loans to Allies for War Purposes, in the Vote for Unclassified Services, No. 10, in the Civil Service Estimates, 1920–21, now before Parliament?

Mr. CHAMBERLAIN: The provision on this sub-head is due to the extent of £16,000,000 to adjustments with Allied Governments in respect of pre-Armistice commitments, which will not affect the total of Allied Government obligations held by the British Government. This expenditure will be compensated by a corresponding receipt under the head of miscellaneous revenue. The balance of £2,000,000 provides for minor advances which may prove to be due to Greece and Serbia for war expenditure and for cash adjustments on the renewal of Bills held as security for existing advances to Allies.

Lieut.- Commander KENWORTHY: Can the right hon. Gentleman let us have further details before the Vote is brought before the House as to which Allies this £16,000,000 is due to? With reference to the £2,000,000 for Serbia, is that due to active war operations since the Armistice or some outstanding War charges?

Mr. CHAMBERLAIN: It is due to overlapping war charges. The answer to the first part of the hon. and gallant Gentleman's supplementary question is that the money is required for adjustments on account of France and Italy.

Lieut. - Commander KENWORTHY: Are these for operations since the Armistice or before the Armistice?

Mr. CHAMBERLAIN: I have just told the hon. and gallant Gentleman that they were before the Armistice.

Oral Answers to Questions — BUDGET PROPOSALS.

WAR WEALTH.

Mr. DOYLE: 53.
asked the Chancellor of the Exchequer if he is in a position to give the result of his recent conference with the committee appointed to inquire into the question of war-time wealth; and whether, in view, of the necessity of covering a wider area for revenue purposes, he is prepared greatly to extend the scope of reference of the committee?

Mr. DOYLE: May I say I handed in three questions for the Order Paper today? One of them is the question I am about to ask. The second was altered and put down for to-morrow in another person's handwriting, and the third one does not appear at all.

Mr. SPEAKER: Does the hon. Member think I am responsible for that?

Mr. DOYLE: May I respectfully ask who is responsible?

Mr. SPEAKER: If the hon. Member will speak to me about it, I will ascertain. If he springs this upon me I cannot possibly know.

Mr. CHAMBERLAIN: No, Sir; I have nothing to add to the statement issued by the Committee itself, and to that contained in my speech of yesterday.

NATIONAL DEBT.

Sir CHARLES HANSON: 57.
asked the Chancellor of the Exchequer, if, in view of the importance of liquidating as soon as possible the unfunded debt of the country, and in view also of the admitted difficulty in making a compulsory levy on capital and/or the imposition of a special tax on war profits, he will consider the advisability of making an appeal to the country for voluntary contributions in cash, and/or the equivalent of cash, whereby in one or two instalments the whole of this portion of the public debt might be paid off; and whether such an appeal would probably be generously responded to by all classes of the British public who are intensely anxious to see the national burdens as soon as possible diminished?

Mr. CHAMBERLAIN: I am very far from wishing to discourage voluntary gifts for the reduction of debt, such as I have on several occasions had the good fortune to acknowledge, and if by voluntary organisation the number of these gifts can be increased and systematised, I shall be very glad. But it does not seem to me compatible with my special duty that I should ask for, and still less that I should organise, the collection of such gifts. The business of the Chancellor is to levy fairly sufficient taxation to meet the national needs. Voluntary help must be rendered voluntarily, and my intervention would only tend to confusion between the fulfilment of the taxpayer's legal duty and his voluntary patriotism.

VOLUNTEER OFFICERS (INCOME TAX).

Captain R. TERRELL: 54.
asked the Chancellor of the Exchequer if he is aware that the Special Commissioners of Income Tax are seeking to debar volunteer officers from the benefits purporting by Section 51 of the Income Tax Act, 1918, to be conferred upon any of the military or naval forces of the Crown; and if he will state upon what grounds the volunteers are deprived of the benefits granted to the other military forces in respect of the payment of Super-tax?

Mr. CHAMBERLAIN: I would refer my hon. and gallant Friend to the answer
given to the hon. Member for Devonport on the 15th instant, a copy of which I am sending him.

TAXES (STAFF).

Mr. G. LOCKER-LAMPSON: 55.
asked the Chancellor of the Exchequer how many clerks are employed, directly or indirectly, on claims for repayment of tax; and what is the cost of that Department?

Mr. CHAMBERLAIN: A statement is being prepared of the staff engaged on claims for repayment and the cost for the year 1919–20, which I will communicate to my hon. Friend in due course.

Mr. LOCKER-LAMPSON: 56.
asked what is the estimated cost of the increase of the staffs of inspectors of taxes if they take over the duties now carried out by assessors?

Mr. CHAMBERLAIN: The transfer to inspectors of taxes of the duties now carried out by assessors would not necessitate any increase in the number of inspectors. The cost of any additional clerical assistance that would be required cannot be precisely estimated, but would certainly be small.

Mr. LOCKER-LAMPSON: Is the Chancellor of the Exchequer aware that the Royal Commission's Report practically showed that the present assessors have done their work with admirable efficiency, and will he reconsider his decision to abolish these officials?

Mr. CHAMBERLAIN: I think we can better argue that question when we come to the Bill which embodies the recommendations of the Commission.

Oral Answers to Questions — EX-SERVICE MEN.

DEPENDENTS UPON EX-SOLDIERS AFTER DISCHARGE.

Mr. ALFRED T. DAVIES: 58.
asked the Minister of Pensions whether, although a woman marries an ex-soldier after his discharge and her husband subsequently dies from a cause directly the result of his service in the Army, she is not entitled to any pension allowance, yet if the woman had been living with the man,
though not married to him, she would be entitled to receive a pension from the State?

Major TRYON: A woman who only becomes dependent upon an ex-soldier after his discharge cannot be granted a pension under the Royal Warrant upon his death, whether she was legally married to him or was living with him as his wife.

LAND SETTLEMENT.

Major MACKENZIE WOOD: 62.
asked the Secretary for Scotland whether some of the ex-service men who have received holdings under the Lands Settlement (Scotland) Act, 1919, have not yet had their rents fixed, though they have commenced work upon their land; if so, how many tenants are in that position; and why they have been allowed to incur obligations without knowing the extent of them?

The SECRETARY for SCOTLAND (Mr. Munro): The answer to the first part of the question is in the affirmative. The number of tenants of the Board whose rents have not yet been finally fixed is 101. The tenants have voluntarily accepted this arrangement, and the Board are required to fix a rent that is reasonable. The adjustment of a rent in the special circumstances is sometimes a complicated matter, but it was thought best to yield to the desire of the men to obtain possession of the land without delay. The rents will be fixed as soon as possible.

Lieut.-Colonel MURRAY: Will this rent be fixed by the Board or the Land Court?

Mr. MUNRO: By the Board of Agriculture.

Major WOOD: What is the reason for the delay?

Mr. MUNRO: The reasons I have explained in my answer—the complicated questions that arise for decision in many of the cases. First of all, there are the interests of the men you are settling on the land; and, secondly, the interests of the ratepayers, who look for an adequate return for the public money expended.

EDUCATION (SCOTLAND) ACT, 1918.

Mr. HOGGE: 61.
asked the Secretary for Scotland when the Clause in the Edu-
cation (Scotland) Act, 1918, prohibiting street trading under 17 years of age, will come into operation?

Mr. MUNRO: Section 16 of the Education (Scotland) Act, 1918, is, as a whole, closely connected with the raising of the school age to 15 years, the " appointed day " for which has not yet been fixed. As a result, however, of representations received I have undertaken to consider whether it will be possible and advisable to bring into force Sub-section (2) of Section 16 at an earlier date than the remainder of the Section.

SCOTTISH NURSING COUNCIL.

Mr. COWAN: 64.
asked the Secretary for Scotland whether the Scottish Nursing Council has yet been constituted, and when the names of members are likely to be published?

Mr. MUNRO: My hon. Friend will find the list of members in the Scottish newspapers of yesterday.

Oral Answers to Questions — FOOD SUPPLIES.

FAT CATTLE, ABERDEENSHIRE.

Major M. WOOD: 63.
asked the Secretary for Scotland whether he is aware that dissatisfaction exists among Aberdeenshire farmers on account of the Food Controller's failure to open Ellon and Insch auction marts as grading centres for fat cattle; whether he is aware that, whereas the grading price is fixed on a fast of five hours, the present arrangements in Aberdeen frequently entail a fast of over 10 hours besides loss of weight caused to the animals by the railway journey; and whether he will make representations to the Food Controller with a view to the protection of agricultural interests in this matter in the country?

The MINISTER of FOOD (Mr. McCurdy): I have been asked to reply. The question of opening the auction marts referred to as grading centres for fat cattle has been carefully considered on more than one occasion by the Live Stock Advisory Committee for the area, on which are represented farmers, auctioneers, and other interests.
This Committee has decided that it would be inadvisable to establish further grading centres, especially as this action would involve the appointment of additional officials. The loss of weight occasioned by the present arrangements is already allowed for in the grading at Aberdeen. It would not, therefore, appear that any serious hardship is caused by the present system.

Major WOOD: Is the right hon. Gentleman aware that this is causing great congestion on the railways?

Mr. McCURDY: No, Sir, I am not aware of that.

Lieut-Colonel MURRAY: Is the right hon. Gentleman aware of similar representations to that referred to from other parts of Aberdeenshire; and may we take it that meat control will be abolished on 1st July—is that definite?

Mr. McCURDY: I should like to have notice of that question.

CONTROL OF PRICES.

Captain TERRELL: 65.
asked the Minister of Food the policy of his Department with respect to the de-control of the remaining articles of food still under official regulation?

Mr. McCURDY: The continued shortage of supplies and rise in prices of essential foodstuffs, with the consequent hardship to the consuming classes, and continued increase in the cost of living, render it necessary that some measure of supervision and control over prices and profiteering in foodstuffs shall continue for some time to come. I cannot within the limits of this answer indicate any detailed policy as regards particular foodstuffs, since each commodity has its own peculiar and often intricate problems.

MILK (SURPLUS FOR CHEESE).

Mr. SITCH: 66.
asked the Minister of Food if his attention has been drawn to the prices set out in a circular issued by the Great Western and Metropolitan Dairies, Limited, to farmers who are there offered Is. 7d. per gallon for milk during the current month for which the consumer is charged at the rate of 3s. 4d. per gallon; and whether he contemplates taking any action in the matter?

Mr. McCURDY: I understand that the figure of 1s. 7d. per gallon in the circular referred to by the hon. Member is an offer made to the producer for surplus milk to be used for cheese making. This price is not comparable to the price of 3s. 4d. to the consumer for consumption as liquid milk, which includes wholesale and retail distribution costs.

JAM MANUFACTURE.

Captain COOTE: 67.
asked the Minister of Food whether any concessions in the price of sugar are allowed to jam manufacturers or whether they have to pay the same price as the ordinary consumer?

Mr. McCURDY: The price at present being paid by jam manufacturers for sugar is 150s. per cwt., the same price as that paid by all other manufacturers. The domestic consumer is, however, at present charged at a much lower rate.

Major WHELER: 69.
asked the Minister of Food whether, in view of the value of jam as an article of daily diet, he will consider the desirability of increasing considerably the proposed allowance of sugar for jam making to private individuals who make declarations as to the amount of fruit available for jam this year, even if, in order to make this increased allowance, he has to curtail the amount of sugar now allowed for the making of sweets?

Mr. McCURDY: I do not consider that the increase in the allocation for domestic preserving made possible by any further reduction in the amount of sugar used for confectionery purposes would be commensurate with the distress and unemployment which this action would cause in the confectionery trade generally. The quantity of sugar issued to manufacturers of confectionery has already been cut down to one-half of that used in 1915.

Mr. A. PARKINSON: 70.
asked the Parliamentary Secretary to the Ministry of Food what was the price paid by jam manufacturers for sugar in each of the years 1913 to 1920; and what was the price charged to the domestic users during the same years?

Mr. McCURDY: I have no information as to the prices paid for sugar by jam manufacturers prior to the War; the price paid by domestic users in 1913 was about 2d. per lb. I will send the hon. Member, as soon as possible, a statement showing
the variations in the wholesale and retail prices of sugar from the date of the establishment of the Royal Commission on Sugar Supplies to the present day.

FOOD STOCKS AT PORTS

Major ENTWISTLE: 68.
asked the Minister of Food if he is aware of the long-continued holding up of large quantities of food at Hull and other ports; and if he can take steps to release them with a view to reducing the cost of living?

Mr. McCURDY: No exceptional stocks or exceptionally large quantities of foodstuffs under the control of my Department are being held up at Hull or other ports. As regards rationed commodities, such as sugar and butter, it is necessary to maintain a certain reserve supply in order to ensure the regularity of the ration, otherwise, apart from frozen meat, which is under the control of the Board of Trade, stocks imported on Government account are not large and are distributed as rapidly as possible.

Lieut. - Commander KENWORTHY: Why has not the frozen meat been released upon the market so as to bring down the price?

Mr. PALMER: Is it not the fact that the right hon. Gentleman himself has seen an enormous stock of bacon held up at the London docks?

Mr. McCURDY: In regard to the last question, no, Sir, I have not seen enormous stocks of bacon being held up at the London docks.

Mr. PALMER: Mutton?

Mr. McCURDY: As to the question of the frozen meat, it would perhaps be more convenient if the hon. and gallant Gentleman would address his question to the President of the Board of Trade. But I may say that the question of frozen meat is receiving the joint and continuous attention at the present time of the Board of Trade and the Ministry of Food.

Lieut. - Commander KENWORTHY: Will the hon. Gentleman answer my question, would not the release of this meat bring the price down?

Mr. McCURDY: No, Sir; the question is not so simple as the hon. and gallant Gentleman appears to consider. At the present time the distribution of frozen
meat is very close up to the transport capacity of the country for distributing frozen meat.

Mr. G. TERRELL: Is it not the fact that those who have the handling of the frozen meat trade are very strongly opposed to the continuance of control, and is it not the fact that they say that the continuance of control is merely for the purpose of keeping control going in the interests of the officials engaged in it?

Mr. McCURDY: I am quite aware that statements of that kind are being made. I also profoundly dissent from the justice or the reasoning of the statement in the question.

Mr. RENWICK: Would it not be more convenient if the control of frozen meat was placed under the Food Controller rather than the Board of Trade?

Mr. TERRELL: Is it not the opportunity, now that there is an abundance of frozen meat, for getting rid of control? Is not the time of abundance the time to abandon control? It cannot be abandoned when there is a shortage.

WRECKS (SALVAGE).

Viscount CURZON: 60.
asked the Parliamentary Secretary to the Shipping Controller what has been the cost of the salvage of wrecks salved since the Armistice; what has been the cost of repairing and reconditioning these ships; what is the policy of the Ministry of Shipping with regard to these ships; and on how many ships are salvage operations now proceeding?

Commander EYRES-MONSELL (Treasurer of the Household—for Colonel Wilson): The amount spent to date on salvage of wrecks salved since the Armistice is about £115,000, but there are many accounts still to come in. The cost of repairs and reconditioning in cases where vessels have been repaired by the Ministry is not yet available. The policy of the Ministry is to spend as little as possible on these wrecks and to dispose of them as soon as possible. Salvage operations are proceeding on six ships.

CEYLON CONSTITUTION.

Colonel WEDGWOOD: 71.
asked the Under-Secretary of State for the Colonies whether any steps are to be taken in this Session to promote a constitution in Ceylon; and whether he will lay the draft constitution upon the Table before it is enacted so that the scheme may be discussed?

The UNDER-SECRETARY of STATE for the COLONIES (Lieut.-Colonel Amery): I would refer my hon. and gallant Friend to the reply which I gave to the similar question addressed to me by the hon. Member for the Bishop Auckland Division on the 14th April.

Colonel WEDGWOOD: Will the hon. and gallant Gentleman lay the draft constitution on the Table so that the scheme may be discussed?

Lieut.-Colonel AMERY: I gave an assurance on this point the other day to my hon. and gallant Friend. We shall certainly give the House fuller and further information as to our policy before any final settlement takes place.

Colonel WEDGWOOD: Shall we be able to vote on the matter?

Lieut.-Colonel AMERY: I do not know that the House is entitled to vote on every matter of detail.

Lieut. - Commander KENWORTHY: Surely a constitution for Ceylon is a matter which must be approved by the House?

WAR MEMORIAL (VICTORIA TOWER).

Mr. SITCH: 72.
asked the First Commissioner of Works if he has considered, and if not will he, the possibility of adapting the accommodation of the Victoria Tower, Westminster, to the installation of bells and the carillon apparatus, as a Houses of Parliament memorial of the great War?

The FIRST COMMISSIONER of WORKS (Sir Alfred Mond): I am considering the suggestion of my hon. Friend, but, in view of the structural alterations which would be required to the Tower and of the expense involved, I fear the scheme is not likely to commend itself to the Members of either House.

TERRITORIAL FORCE (HOLIDAY PAY).

Colonel BURN: 73.
asked whether the employees in the public parks will be granted their full civil pay during the period of the annual training if they spend their annual holiday in serving their country in the Territorial Force?

Sir A. MOND: The employees in question, provided they have completed six months' service, will receive the same privileges as other Civil Servants attending camp, namely, those attending for a fortnight will be allowed one week's special leave on full civil pay, the remaining leave being taken as part of their ordinary allowance of annual leave on full civil pay or as special leave without pay. If their attendance in camp is less than a fortnight, the whole period of their absence must be taken out of their annual leave or reckoned as special leave without pay.

Colonel BURN: Would not the example of the Government be good for private employers if these men had seven days ordinary leave as well as attending the camp which they devote entirely to the service of their country?

Sir A. MOND: These Regulations are laid down by the Treasury and the hon. and gallant Member had better address his question to the Treasury.

Colonel BURN: Will the right hon. Gentleman support that view and use his influence with the Treasury?

Sir A. MOND: The hon. and gallant Member must see that these Regulations affect the whole of the Civil Service and not merely my Department.

BILLS PRESENTED.

PUBLIC-HOUSE IMPROVEMENT BILL,

"to amend the Law relating to the sale by retail of excisable liquors." Presented by Sir WATSON RUTHEBFORD; supported by Sir James Agg-Gardner, Sir Herbert Nield, and Colonel Yate; to be read a Second time upon Friday, 30th April, and to be printed. [Bill 79.]

BANK NOTES (IRELAND) BILL,

"to amend the Law with respect to the place of payment of Notes issued by
banks of issue in Ireland." Presented by Mr. BALDWIN; supported by the Chancellor of the Exchequer; to be read a Second time To-morrow, and to be printed. [Bill 80.]

SHOPS (EARLY CLOSING) BILL,

Reported, with Amendments, from Standing Committee B.

Report to lie upon the Table, and to be printed. [No. 76.]

Minutes of the Proceedings of the Standing Committee to be printed. [No. 76.]

Bill, as amended (in the Standing Committee), to be taken into consideration upon Monday next, and to be printed. [Bill 78.]

HOUSE LETTING AND RATING (SCOTLAND) BILL,

Reported, with Amendments, from the Standing Committee on Scottish Bills.

Report to lie upon the Table, and to be printed. [No. 77.]

Minutes of the Proceedings of the Standing Committee to be printed. [No. 77.]

Bill, as amended (in the Standing Committee), to be taken into consideration To-morrow, and to be printed. [Bill 77.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE A.

Sir SAMUEL ROBERTS: reported from the Committee of Selection; That they had added the following Member to Standing Committee A: Sir Kingsley Wood.

Report to lie upon the Table.

Orders of the Day — WAYS AND MEANS.

Considered in Committee.

[Mr. WHITLEY in the Chair.]

Orders of the Day — BUDGET PROPOSALS—AMENDMENT OF LAW.

Motion made, and Question proposed,
That it is expedient to amend the Law relating to the National Debt, Customs and Inland Revenue (including Excise), and to make further provision in connection with Finance."—[Mr. Chamberlain.]

Mr. ASQUITH: There was one feature in the interesting and comprehensive statement made by the Chancellor of the Exchequer yesterday which, I think, must give unqualified satisfaction, not only to those in every quarter of the House, but throughout the country and the Empire, and it was that, taking an average of years since the outbreak of War we in the United Kingdom contributed towards the cost of the War 36 per cent. in revenue and only 63 per cent. by borrowing. That is a unique record among all the belligerent powers on one side or the other, and it represents a practically continuous policy pursued from the earliest days of the War, carried on by successive Administrations, and supported, I am glad to say, throughout by the overwhelming opinion of the House of Commons and, what is still more important, by the ungrudging and patriotic sympathy and sacrifice of the people of this country. Whatever gloomy features there may be, and there are some undoubtedly in our financial situation, we may venture without undue self-complacency to record and rejoice at that remarkable proof of the willingness of our people to make great sacrifices for great purposes.
I would like by way of preface to the observations I am going to make, which I hope to be able to compress within a comparatively narrow compass, to say a word or two as to the balance sheets my right hon. Friend the Chancellor of the Exchequer presented to us yesterday—the completed balance sheet for the year 1919–20, and the prospective estimated balance sheet
for the current financial year. In regard to the first, he had to confess a deficit of £326,000,000, while the second he worked out, as a probable result of the finances of the year, with a surplus of £234,000,000. The point which I wish to make at the outset with regard to both these balance-sheets is, that on each of them there appears on the side of Revenue a very considerable sum under the heading "Miscellaneous Receipts." Those Miscellaneous Receipts, in the balance sheet of the concluded year, were £280,000,000, and in the balance sheet of the next financial year a little over £300,000,000, and they represent realisations from the Votes of Credit for war purposes. They are independent, speaking of the last completed year, of the appropriations which have been made in aid by the several spending Departments for stores and other materials at their disposal. These appropriations amount in the year 1919–20 to a very considerable sum, so considerable that in the case of the Munitions Department it was only necessary to take a token Vote for the whole year.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): And for shipping also.

Mr. ASQUITH: Yes, in both cases. I wish to point out first in regard to these Miscellaneous Receipts, as appears from the official paper, what an extraordinarily difficult thing it is to estimate the amount to be made by realisation. Nothing could be more remarkable in that respect than the figures estimated in my right hon. friend's Budget of last year, the figures presented in his Supplementary Budget in October, and the figures actually realised. The Budget estimate was £209,000,000. The actual receipt was £71,000,000 in excess of the Budget estimate, and £130,000,000 in excess of the revised estimate of October last. It is quite obvious if that very speculative and conjectural item were deducted, whatever precise figure it is put at, from the revenue side of the account, and were earmarked for the reduction of debt, the nominal deficit for 1919–20 of £326,000,000 Would be raised to a deficit of something like £500,000,000. In the same way, if in the completed forecast of the final balance sheet of the current year that item were deducted from the receipts,
not only would there not be a surplus of £234,000,000 but there would be a substantial deficit. It may be said, and I daresay the Chancellor of the Exchequer will say it, that this is really a bookkeeping matter, but I confess I attach very considerable importance to a correct framing of our accounts in this respect. I have not met any business man anywhere who would agree that this was the proper way of presenting the balance sheet of national revenue and national expenditure. There are very good reasons for that opinion.
In the first place it gives a misleading account to the world of the state of the national finance of the year, and in the next place those receipts are very largely, as experience has shown, in the nature of windfalls. As regards particular items and particular amounts they cannot be estimated with anything like substantial accuracy. There could not be a more complete illustration of that than the contrast between the actual receipts, the Budget estimate, and the revised Budget estimate of last year. Lastly, when, as in time must happen, they cease altogether, when you have realised everything you can realise, unless in the meanwhile some strenuous and effectual effort is made to reduce the general expenditure the gaping lacuna on that side of the account can only be met in one of two ways, either by additional taxation or by resort to new borrowing. I therefore hope that the Chancellor of the Exchequer will give us some satisfactory assurances on that point. These assets, as everybody knows, are, to a large extent, the produce of borrowed money, and, therefore, according to all ordinary principles which regulate accounts, they ought to be earmarked for repayment of loans. I have never known business carried on on any other principle than that. Making every allowance for the special exigencies of the War, while I would myself agree that what I said does not apply to the whole, I think it does apply to far the largest portion of the amount, and it is very desirable for the clearing up of our domestic financial situation that this process should cease, and that we should treat these things no longer as items of revenue, but earmark them for the repayment of debt.

Mr. CHAMBERLAIN: Will my right hon. Friend give any guidance as to the
line which he would recommend us to follow in distinguishing between assets which we may still bring into revenue and assets which we must earmark for the extinction of debt? I shall be grateful for any suggestion which will assist me.

4.0 P.M.

Mr. ASQUITH: My right hon. Friend is quite entitled to ask that. Primâ facie, I should say that the whole ought to be earmarked for the extinction of debt, but I would be quite prepared to consider some modification in the application of that extreme and logical principle. That, though from the point of view of national accountancy an important view of the matter, does not, after all, go to the root of the situation. The point to which I desire to call the attention of the Committee, a point that dominates the whole of our finance, is the state of the debt itself. Here I wish that the Chancellor of the Exchequer, who has given us in this White Paper a good deal more information than is generally given, had included in it what I may call a capital account. I do not find in this White Paper any statement of the capital assets and liabilities of the country. Perhaps he can supply it. I am sure that it would be for the convenience of the House and the country. But, without any such official statement, let me indicate what, so far as I can ascertain, is the actual situation. My right hon. Friend told us yesterday that the total dead-weight debt on the 31st of March in the present year, that is to say, at the close of the last financial year, was £7,835,000,000. I should like to have seen in detail the constituent items which make up that total, but I gather from what he told us that, of the £7,835,000,000, £1,278,000,000 represented external debt and £1,312,000,000 floating debt, from which the inference, by the ordinary rules of subtraction, would appear to be that £5,200,000,000 represents, roughly, funded debt at this moment.

Mr. CHAMBERLAIN: That, I think, is substantially correct. My right hon. Friend, of course, is using the term "funded debt" to include Exchequer Bonds and other debt?

Mr. ASQUITH: Yes, certainly. We have always made a distinction between
funded and floating debt, and I make it in that sense. I am very glad to find— it is one of the satisfactory things in the statement made by the Chancellor of the Exchequer yesterday—that both under the head of external debt and of floating debt there has been a substantial reduction during the last twelve months. It amounts, as I gather, though it is very difficult to trace the figures in the tables, in the case of external debt to £86,000,000 and in the case of floating debt to the still more substantial sum of nearly £100,000,000. I do not propose to say anything about the external debt except to express satisfaction that we are going to pay off the Anglo-French Loan to America. Nothing could be more urgent or important than that. With regard to the floating debt, which in my opinion, and I think in that of the Chancellor of the Exchequer, is by far the most serious blot upon our financial and commercial prospects at the present moment, I should like to say a few words. I entirely agree with the Chancellor of the Exchequer that the worst method of creating floating debt and meeting the ordinary necessities of the Government, is by Ways and Means advances, and my right hon. Friend is entitled to credit for having been able by the 31st of March to reduce those advances practically to nothing. Since then things have gone to the worse, and I gather that during the first fortnight in April Ways and Means advances from the Bank of England (not from other sources) amount to no less than £55,000,000. My right hon. Friend said yesterday, as I have pointed out more than once, that is the worst possible form in which Government borrowing can take place, because it aggravates the evil which we wish, if not to abolish, at any rate to mitigate. It increases the supply of purchasing power and it enables the banks to advance money to their customers and to enlarge the already swollen and over-inflated volume of spending power of the country. Any steps which you can take to reduce the necessity for meeting the necessities of the Government by Ways and Means advances will be the first step—I do not say that it will go a very long way—towards mitigating the financial situation.
Therefore, when I come to examine the Budget, the primary question which I ask myself is this: What is the Chancellor doing to reduce the volume of our floating debt? Supposing the taxation remained unchanged on the same basis as it was in the expired financial year, he says that he would have a surplus of £164,000,000. That, of course, is subject to two criticisms. First of all, the surplus is arrived at by including in the receipts the assets to which I have already referred, and which in my judgment ought to have been earmarked for reduction of debt. But it is subject also to the further and perhaps for practical purposes the more important criticism, namely, that we still do not know, and experience leads us to form very gloomy apprehensions—what additions may be made in the course of the financial year to the estimated expenditure. The Chancellor, I think, has put down a lump sum of £20,000,000 for Supplementary Estimates. That, I believe, is already mortgaged or practically mortgaged by public announcements of policy, and I think that we shall be very lucky, assuming the Treasury to be as vigilant as I know they desire to be, and as I hope they will be in practice as watch-dogs for the taxpayer, if we get off with that £20,000,000. I should be myself inclined to think that a very much larger sum, in the way of supplementary expenditure, will be forced upon the Chancellor of the Exchequer by the Department before he comes to the end of the financial year, 1920–21, unless he is adequately supported by this House and public opinion.
I say that by way of precaution, but let us take his figure of £164,000,000 as the surplus which may fairly be assumed or estimated on the basis of existing taxation. What contribution out of the surplus would or could have been made to the reduction of the floating debt? The Chancellor of the Exchequer has answered the question and has answered it perfectly candidly himself. By the necessities of various sinking funds, by the peculiar exigency in which he finds himself, of taking Government securities for the payment of Death Duties, and for other reasons, among which, I suppose, we must include repayments on account of external debt—for one reason or another, out of that £164,000,000 estimated surplus no less than £160,000,000 will disappear before, the Chancellor of the Exchequer is able
to apply any of it for the purposes of the reduction of floating debt. There is £4,000,000 left, but that really is a bagatelle. My right hon. Friend was bound to resort, and resort on a large scale, to new taxation if he wished to make any real inroad on the volume of floating debt. The Chancellor of the Exchequer anticipates that by his new taxes his surplus of £164,000,000 will be raised to £234,000,000. If you deduct from hat£234,000,000 £160,000,000, which he acknowledges is mortgaged to other purposes, it gives a net balance of a little over £70,000,000 for the reduction of floating debt, and that is the whole of the provision made by this Budget for the floating debt.

Mr. CHAMBERLAIN: My right hon. Friend is so fair that I know he will not desire to do any injustice. It is a peculiarity of the Excess Profits Duty, on which I have often insisted, that a change in the rate at which it is levied does not become effective until the year afterwards. Therefore, the provision made by this Budget is much greater than the provision accruing in this year.

Mr. ASQUITH: My right hon. Friend may be quite sure that I am going to recognise that presently, but the actual provision made by this Budget for the reduction of floating debt is a little over £70,000,000 in the current financial year. It is quite true, as I gather from the Chancellor's speech, that he still looks forward not perhaps next year, not perhaps the year after next, to the advent of that fleeting, that chameleon-like creation of Treasury fancy, the normal year. I hope that it may arrive sometime before the Greek Kalends. In that normal year, whenever it does come, if it materialises, his anticipation is that he will have £180,000,000 available for debt reduction. I gathered that from the peroration of his speech yesterday.

Mr. CHAMBERLAIN: Without Excess Profits Duty.

Mr. ASQUITH: Yes, and also without these artificial receipts, such as sales of assets and other adventitious windfalls of that kind. I do not think that we need deal for the moment with the normal year. Let us wait until it arrives.
Before I draw the conclusion which I am going to draw, I must say a few words
about the proposals of the Chancellor of Exchequer for new taxation. They have a negative as well as a positive aspect. Before he came to indicate his proposals for the imposition of new taxation, I thought, if he will allow me to say so, that his habitual austerity for a moment deserted him when he began to speak, in the sympathetic accents of an experienced family physician, of the demise of the Land Values Duty. It is much to be regretted that circumstances prevented the chief mourner from attending the obsequies, and that he should have been deprived, through no fault of his own, of the opportunity, which I feel sure he would have prized, of giving a short farewell address at the graveside. I must take his place, inadequate as I feel for such an arduous and exacting role. What are these Land Values Duties which the Chancellor of Exchequer is going to cast on the scrap heap? They were, if not the most important, certainly the most contentious chapter in the Budget of 1909. I was a party to that Budget, and my memory goes back to those distant days. What a struggle it was! We formed, I think, an association called the Budget League. We sent a fiery cross the length and breadth of the country. Those were days of comparatively crude development in the arts of political propaganda. I am sorry not to see my right hon. Friend the Secretary of State for War in his place. Some of us, and he and I were among the number, even went so far as to speak messages into gramophones, which were circulated throughout the villages and hamlets in Great Britain. We fought the House of Lords. We dissolved Parliament—not entirely or exclusively, for we had other purposes—but largely, to get these duties on the Statute Book. [An HON. MEMBER: "Hear, hear!"] A little allowance must be made for me; I am acting the part. It might have fallen into more unsympathetic hands.
They have been ever since on the Statute Book. It is true, as the Chancellor of the Exchequer said yesterday, that they have not yielded all the fruit— the rare and refreshing fruit—which was anticipated from them. That was not at all the fault of their parents. On the contrary, they have been crippled in their infancy; they were crippled, and to a large extent mutilated, in Committee
of this House— [An HON. MEMBER: "They had rickets to begin with!"]. Still worse, after they had become part of the law of the land, they were, if I may use the expression, disembowelled, and to a certain extent devitalised, by the decisions of unsympathetic legal tribunals. Then, at a critical moment, came the War, which arrested their further development. I am one of the few survivors of their original authors who are present here to-day. As one of those survivors, I venture to repeat to-day what I have often said before, and what I said at the time and believe now, namely, that in principle and conception they were perfectly sound; and I think it is a great mistake to wipe them off the Statute Book without putting anything in their place. There is no more fit subject for taxation than the unimproved value of land, and it is much to be regretted that the Committee, appointed, I think, by my right hon. Friend, which recently sat, and which, I believe, came to no considered conclusion, had not the opportunity, which might well have been afforded by the House of Commons, of so far enlarging and vivifying the terms of their reference, as to enable them to suggest some practical alternative form in which these duties could have remained. I venture to repeat a phrase of my own which I used many years ago in relation to a totally different tax, and to say that if, as appears to be the case, they are to be for the moment, more or less decently, interred, their epitaph should be, not Resurrexit, but Resurgam. The Chancellor of the Exchequer offered us one crumb of comfort. The machinery of valuation, with its officers and staff and so forth, is to be retained. The general valuation was suspended very near the beginning of the War, for obvious reasons. The Chancellor of the Exchequer thinks that the condition of values at this moment is so precarious and unstable that the staff could not usefully apply their energies to that purpose. In the meantime they are to be retained, and I am very glad that they are, because I agree with my right hon. Friend that, quite apart from a general valuation, they perform very useful functions for the various Departments of the State. I am particularly glad to think that they will continue to keep a record of sales and other transactions, so that, when the
resurrection of the duties takes place, as I am sure it will, we shall find in existence, still in active working, and equipped with large additional resources of information and knowledge, this most useful and excellent Department.
That is the negative side of the Chancellor of Exchequer's proposals with regard to taxation. Let me now say just two or three words in regard to his positive proposals. While I make all necessary reserve for the discussion of particulars when the new Finance Bill is in our hands, I am glad to acknowledge that I think he has proceeded, in the main, on sound financial lines. The additional taxation of intoxicating liquors was inevitable, and, in my judgment, is thoroughly justified by our experience during the last two years. I have so much respect, founded upon long knowledge and experience, for the judgment in technical matters of the Inland Revenue authorities, that I take the Chancellor of Exchequer's estimate of the probable yield of the beer and spirit taxes at the figures which he gave. If it were not for that respect, I should be a little apprehensive whether there might not be a sufficient check on consumption to render these figures somewhat sanguine, if not too optimistic. In regard to the proposed increase in the wine duties, I entertain, I confess, considerable doubt. That is not from any tenderness to the consumers of wine as compared with other forms of alcohol, but it is for two reasons. The first is that, although my right hon. Friend's estimate, which amounted to some three or four millions, of the yield of those duties, was carefully based upon the same expert knowledge as in the case of spirits and beer, I think that, having regard to the special conditions of this particular commodity, it is an over-sanguine estimate. My other reason is more serious. No Chancellor of Exchequer, for the last 20 years, has failed to be confronted with the possibilities of an increase in this particular duty. It is now 12 years since I ceased to be Chancellor of the Exchequer, but my right hon. Friend the Prime Minister, when he was Chancellor of the Exchequer, had to consider it, and we all of us shrank from the task, for very good reasons. The wine duty raises most delicate and difficult international questions, and it so happens that they are questions which at this moment concern
three countries—France, Spain and Portugal. [An HON. MEMBER: "And Italy also."] Italy is concerned to some extent. Of these four countries, three are our recent allies. When I heard my right hon. Friend yesterday, amidst a good deal of general applause, say that he was going to put on a tax which would amount to 6s. on every bottle of champagne imported into and consumed in this country, coupled with the increased duties which are at the same time to be imposed on all French wines, I asked myself, " Is the game worth the candle? " The amount of revenue to be received at the highest estimate—and I think the estimate is excessive—is relatively small. It is no good aiming at a sort of ideal equality—.abstract equality—between different countries. To give rise, as I am afraid you will, to a certain amount of not illegitimate or unnatural friction and ill-feeling among these 'countries, which are close friends, and some of which have been closer Allies of our own, appears to me to be a matter, at any rate, of very doubtful policy.
In regard to the proposed increase in stamp duties I have nothing to say except that I heartily agree. The additional duty on capital on the flotation of new companies is eminently desirable and necessary. I wish the sum to be raised were bigger than the Chancellor of the Exchequer estimates it will be. As to the Income Tax and Super-tax the changes which the right hon. Gentleman has adopted from the Report of the Committee seem to me to be entirely in the right direction, and I would say the same, subject of course to some matters of detail, as to the proposed alterations he proposes in the Super-tax. They seem to me, both in lowering the starting point and in the subsequent modifications of the scale, to be justified by experience. We ought to suspend our judgment in regard to these particular changes until we know the terms, not yet settled, of the Income Tax Bill itself, but I look with some apprehension at the immediate loss of revenue the Chancellor of the Exchequer will sustain from these changes. That, however, is inevitable. I do not think in the present year it will be more than £1,250,000, but in a full year it will be a very substantial and serious sum, from
the figures I have heard, something like £16,000,000.

Mr. CHAMBERLAIN: That is, if the further changes recommended by the Commission be carried out. I was pressed yesterday to abandon the three-years' average this year. If I were able to do it, so that next year's tax might be assessed on a single year, it would pretty well clear the deficit.

Mr. ASQUITH: I have given a great deal of attention to Income Tax matters for many years, and I am in favour of the abolition of the three-years' average. Sometimes it would not serve the Chancellor of the Exchequer, but on this occasion it would serve him very well. Quite apart from that, I think it is obsolete, and ought to be discontinued. I think the Corporation Tax—which is the real novel proposal in the Budget—ought to be linked on, in point of argument and consideration, not to the Excess Profits Tax at all—which was after all only temporary, while this is intended to be a permanent financial instrument—but to the Income Tax. It is really a supplementary form to the Income Tax or Super-tax, whichever you like to call it. It belongs to that category, because it is a permanent addition to our financial armoury. I think in principle it is a thoroughly sound tax. One of the greatest abuses of our existing Income Tax system, never more flagrantly and disastrously illustrated than during the last two or three years, is that there are excluded from the area of taxable profits gains which are profits in just as true and full a sense of the word as everything that is included, and that particularly takes place in the dealings of limited liability companies. It is a matter of notoriety to everyone who has any knowledge of business that in the course of these years—it has happened before, but it has been very much accentuated and multiplied since the conclusion of the War—the Income Tax at its present high, though not excessive, rate is successfully evaded by a number of devices, but in particular by two. The profits which, if divided, would be treated as subject properly to Income Tax are intercepted and put in medio by two familiar devices. One is the inflation of the reserve fund and the other is the distribution of what are called bonus shares to the shareholders. These really are, or ought to
be, in the fullest sense of the term, subject not only to Income Tax but to Super-tax, as in the case of a private firm they are subject now. The Chancellor of the Exchequer very rightly has provided in this Corporation Tax a safeguard against at any rate one of these two abuses. I am not sure, because I am not quite clear that I understand the provisions he has made in regard to debentures and preference shares, that he has hit the other—the device I mean of returning to the shareholders, not in the form of profit or of income, which under the present law is taxable, but in the form of what is really an addition to their capital—bonus shares and profits which ought really to be subject to tax. If it was possible to bring that in also—I do not know that it is; I am just submitting the case—it would be worthy of consideration. For the tax as it stands, so far as it goes, I have nothing but commendation, and I am delighted and surprised to hear that it will produce so large a revenue as the Chancellor anticipates— £50,000,000 I think in a full year.

Mr. CHAMBERLAIN: When there is no Excess Profits Tax.

Mr. ASQUITH: Quite. What does the right hon. Gentleman anticipate for the present year?

Mr. CHAMBERLAIN: Only, I think, £3,000,000. In a full year, £35,000,000 with Excess Profits Tax.

Mr. ASQUITH: And without the Excess Profits Tax?

Mr. CHAMBERLAIN: £50,000,000.

Mr. ASQUITH: That is a most valuable addition to our financial armoury, and I heartily congratulate the right hon. Gentleman upon it. The only other proposal which remains is the raising of the Excess Profits Tax from 40 per cent. to 60 per cent. I think the Chancellor of the Exchequer agrees that he would have been better advised if he had not reduced it last year. We had a very considerable sum even last year and we should have a still larger sum this year if we had kept the tax at its original figure of 80 per cent.

Mr. CHAMBERLAIN: I agree that I ought not to have reduced it.

Mr. ASQUITH: It was a mistake, but it is one of those mistakes which are very natural. The rise from 40 per cent. to 60 per cent. is estimated to produce £100,000,000 in all. That means in the three years and not in any particular year, because it is only applied for a particular year and it comes in into the three years. In the last paragraph of the right hon. Gentleman's speech he said:
These changes which I have mentioned will produce in a full year, £198,230,000, or, excluding £9,500,000 drawn from the Post Office, £189,000,000 derived as to £125,000,000 from direct taxation, and £64,000,000 from indirect taxation."—[OFFICIAL REPORT, 19th April, 1920, Col. 99, Vol. 128.]
Are we to understand that in that £189,000,000 the Excess Profits Tax is taken as £100,000,000 in the full year? That is the total for three years. The £100,000,000 is not to be attributed to any particular year. It is the total produce of the Excess Profits Tax imposed this year, to be collected partly this year, partly next year, and partly the year after. You cannot take £100,000,000 as the produce of the Excess Profits Tax in any given year. That is quite obvious.

Mr. CHAMBERLAIN: I will deal with that.

Mr. ASQUITH: It puzzles me for the moment. I do not very well see how the right, hon. Gentleman has got his £198,000,000 unless he puts the whole of the yield from the Excess Profits Tax in a single year. However, that is a detail which he will be able to explain.
I should like to say one or two concluding words which, I think, will clinch the whole matter. I pointed out that as the result of the Budget the great burden and millstone at this moment upon our financial and commercial progress— namely, the floating debt of £1,300,000,000 —will only be reduced during the course of twelve months by a sum a little more than £70,000,000. Even that reduction is subject to the more than probable contingency that, by one or other form of Supplementary Estimates, the expenditure of the year will be increased beyond that which is shown in the Balance Sheet now presented to the Committee. There are large questions involved. I will only give one illustration. Take the case of the Army. The Army Estimates are very high, although they show a substantial and satisfactory reduction
compared with the last two years. The Army Estimates, as they were presented to us by the Secretary of State for War, assumed a very substantial reduction in the course of the present financial year of our forces, not at home, but our forces which are at present employed in distant parts of the world, particularly in Mesopotamia and the Near East. If any development—and this shows how closely finance is intertwined with politics—were to take place, which I deprecate in the strongest possible way, and for which I gave my reasons to the House a few weeks ago, in the scope and range of our political and military commitments in that part of the world, the whole of these Army Estimates become illusory, and a figure very much higher—indefinitely higher—will have to be presented later in the year for the consideration of the House. I might give a dozen illustrations. I might, for instance, take what is far the most formidable and, as I think, the most menacing figure in the whole of this catalogue of expenditure, namely, the £500,000,000 for what are most vaguely and misleadingly described as Civil Services. There is a list of them here. The Chancellor of the Exchequer the other day, skilled parliamentarian as he is, when some of us were criticising these items, the bulk and the amount of them, said, " Point to any single item, any substantial item, and show me how I can reduce that item by £500,000 or by £1,000,000.

Mr. CHAMBERLAIN: I said £5,000,000.

Mr. ASQUITH: Say £10,000,000. How could you reduce them substantially? That was the point It is an easy question for a Chancellor of the Exchequer to put. I have put it myself when we were dealing, not with millions, but with hundreds of thousands. It is an unfair dialectical remark, and it is an unfair burden to impose upon the critics of the Estimates, because it is the business, not of the individual Members of the House who are imperfectly equipped with information in regard to this matter; it is not for them—although now we have the advantage of the Committee of which the right hon. Baronet the Member for the City of London (Sir F. Banbury) is a very vigilant Chairman, and which has done excellent and valuable work during the past few sessions—it is not for the
House or for the Committee, but it is' for the Treasury and the Government, as a Government, to impose upon Departments with vigorous and with imperious authority the limits within which they are to be allowed to spend money. I know that no one holds that view more strongly than the Chancellor of the Exchequer, or is more prepared to give it effect vigorously and continuously within the limits of his opportunities. It must be done. We could not have a better illustration of the urgent and overwhelming necessity for the discharge of that duty in the most ruthless spirit possible than is given by the Budget of the present year.
I have reviewed fully, but I hope not censoriously, the present proposals of the Chancellor of the Exchequer. He has made a bold and courageous attempt to impose additional taxation, as I think on sound lines, and where it can be made without any undue straining of the resources of the country. But what does it all come to? A reduction of £70,000,000 in a floating debt of £1,300,000,000. It is expenditure which lies at the root of the whole thing. The fighting services are comparatively easy to deal with You have three Departments, but to all intents and purposes you have only two Departments, and any Chancellor of the Exchequer who know, his business can deal with them. It is this—I do not like to use backnied classicisms—hydra-headed thing which calls itself the Civil Service, but which is no more the Civil Service than an association, a group of parasitic excrescences upon the normal administrative system of the country It is this that constinutes—I do not like to mix my metaphors too much, but I will indulge in another—the open tap that is constantly being fed by financial tributaries both new and old. The Chancellor of the Exchequer must close that tap or, still better, if he would cut off or cut down its sources of supply, he would perform a service in which he will be supported, I will not say by the whole House —of that I am not so confident—but certainly by united public opinion outside. I have never taken, and I do not take now, a despairing or even a despondent view of our national economic situation, but it needs courageous handling. There are two ways of escape and two only, and they are not alternative but complementary one to the other, from the difficulties in
which we find ourselves. One is to curtail the swollen volume of purchasing power and the other is to enlarge the volume of purchasable and marketable commodities. Much must be left, much ought to be left, and much, I hope, will be left to the enterprise and foresight of the business world. But the State should lead the way in the cessation of borrowing, and in the reduction of debt. That involves what this Budget recognises, substantially increased taxation. It involves also what we have still to look for and what cannot be obtained without both the co-operation and the stimulus of the House of Commons—namely, the drastic reduction of public expenditure.

Mr. CLYNES: With many of the points of view, and with much of the argument of the right hon. Member for Paisley I am in agreement, but I cannot begin my remarks upon this Budget without dissenting entirely from the statement made by the right hon. Gentleman at the beginning of his speech, because many of us on this side of the House do not accept the view that in matters of finance the Governments of the War period did the right thing by the people, or the wise thing by the country. Our view is that we borrowed too much, and entered into too many commitments which now we have to face, and which the future will have to face, and that we did not sufficiently use the enormous financial resources which were at our disposal. Borrowing was a makeshift for financial policy. In some years of the War we borrowed as much as 16s. of every £ we had to spend. It cannot be said that the borrowing policy has been altered by the Government. It has been altered by the country. It is not too much to say that borrowing has been stopped generally because the country has refused further to lend. I do not say that more cannot be got from the country, but the experience of recent attempts, and what is common knowledge to us in respect of general national dissatisfaction, indicated that the Government saw clearly there would be immense difficulty in trying further to raise huge sums by the methods of loan that were too long followed. It may be that in this respect, as the right hon. Member for Paisley has said, we have done better than other countries. That is not
enough. Consider how enormous are the financial resources of this country and consider that here we have reached a point in democratic institutions in Government and out of it not attained by other countries, so that we must expect to be faced with millions of workpeople who, having got to a somewhat different position in the State, are not as likely to submit to the burdens of borrowed money as did the class which preceded them in generations following previous wars.
5.0 P.M.
I suggest to the Committee that just as we diverted for the purposes of victory the whole of the physical energies of the country during the years of war, we should have diverted the whole of the financial resources of the country in the same direction and for the same purpose. What is the problem with which the Chancellor is faced to-day? It is that of trying to cope with the mistakes that were committed during these years of war. It we had not borrowed so largely and piled up such mountains of debt during the five years, the Chancellor of the Exchequer would have had a task of ease compared with the enormous difficulties confronting him to-day. His task now is not to make things balance, not merely to raise revenue in the ordinary financial way, but to deal with this debt, classified under the two heads of Floating Debt and Deadweight Debt. We did not justly or sufficiently use the financial resources of this country to win through the war in the same manner that the country so heroically, all classes, used the physical resources. The right hon. Gentleman pointed out that far-reaching as these proposals appear to many to be, the net effect of them is to make but the slightest impression on this enormous indebtedness—to relieve us to the extent of some £70,000,000 or £80,000,000 out of some £8,000,000,000.

Mr. CHAMBERLAIN: £70,000,000 is the amount which will be available for the reduction of the Floating Debt of £1,300,000,000. The amount available for the reduction of debt of all kinds is £234,000,000.

Mr. CLYNES: I was submitting that this small sum which I have mentioned, and the other which I desire to mention, make but a slight impression upon this
enormous burden which the country still has to carry. The process by which the Chancellor of the Exchequer is seeking now to raise revenue will in no way lessen the difficulty of the Government generally, or restore to the country that condition of peace in industry and business that all of us desire. And I suggest to him that the certain effect of the process which he is now about to follow will be to further increase the cost of living, and to add to the burden which results from that cost of living. The pressure of low purchasing power has been felt very keenly by millions of the people. I doubt whether the right hon. Gentleman can entertain any hope in regard to any one of his new proposals that it will check the increase of prices. On the contrary, the probability is that it will only further intensify the race between prices and wages, the race of the worker in his effort to make wages equal to the speed at which prices are advancing.
Workers have not profited, so far as compared with pre-War standard of living, from all the advances which have been secured. I am speaking of the workers collectively, and clearly the experience of which I am speaking is not within the common daily knowledge of many Members of this House. Taking the figures as they are given, together with one's common experience, I say, with no intention to exaggerate, that in the main collectively workers have not at all benefited from the advances in wages which they have secured. It is the workers who are still bearing the burden which all of us are wishful to escape, the burden of hard, irksome, dirty, difficult work. It is the workers who have the worst of houses, who inhabit the slum districts, which are daily growing worse because of the housing problem itself, and who still have to take the most inferior food, food of the poorest quality, because their purses are not bulky enough to secure the best quality. These conditions are all intensified and made worse for the mass of the workers since the end of the War as compared with what were their conditions during the War. The net effect of budgeting on these lines will be further to intensify the feeling—much as I dread it and dislike it—and the difficulties arising from these repeated demands that are being made for higher rates of wages.
The House will not object to the reminder that the common needs of the tables of the poor—tea, coffee, cocoa— bear an extreme burden for the purposes of revenue. A poor woman who buys a half a pound of tea must, when making her purchase, give sixpence towards paying for the War. The tax of a shilling upon tea, the heavy tax upon sugar and other commodities which I have mentioned are left untouched by any proposals of the Chancellor of the Exchequer, and if the financial resources of the country and its capacity for wealth making are so great, one way in which the Chancellor might have helped in respect to this race between prices and wages is to have directly have reduced the cost of living by even taking off some of these duties, and if necessary, replacing them by other taxes which could be imposed.
I would remind the hon. Gentleman of the fact that there is no greater problem facing this Government to-day than the problem arising from these recurring wage demands. Strikes are caused, and the time of Ministers and of Departments is occupied in trying to compose these differences, and the country remains in a state of ferment because of this question of the cost of living to which, in the end, you may say you can trace most, if not all, of the social and industrial difficulties of the moment. There is then no greater question, and perhaps before we have concluded our discussion on these various matters the right hon. Gentleman will think it proper to say something upon the view which we put, that an example might be set by the Government in respect to reducing the cost of living by dealing with some of these taxes which now rest upon food. The Government itself must recognise how pinched is the position in reference to food. It is recognised in the fact that even yet the Government retains the subsidy on bread, for though the price has recently gone up, yet bread for a considerable time will be subsidised. It is subsidised obviously in order that it should be made cheap enough to enable poor people to buy it, for many millions of people have not means enough to purchase their daily bread at the ordinary market price, and hence the Government makes this contribution which still remains at something like £1,000,000 a week.
I listened with some pleasure to the remarks of the right hon. Member for Pais-
ley (Mr.Asquith) on the subject of the taxation of land values. This Budget, if it is not distinguished for anything else, is distinguished for its tender treatment of the land-owning classes. I am not thinking merely in the terms of those taxes which in due course might have been imposed on certain of the land of the country had the War not intervened. I marvel at the patience of the people of this country, having a land to fight for and work for, and which they can call their own, but which literally belongs to a few people, in suffering the exactions and exploitations imposed upon them by those who own the land. There is not a single activity or national interest or anything in the way of work, trade or business that can be pursued that must not pay its contribution to the landowner, and millions and millions a year pour into the pockets of landowners, who remain substantially untaxed compared with other activities and other forms of problems. This surely is a form of property to which a sympathetic Chancellor might have turned in order to secure revenue in exchange for the relief which I suggest he could have given to a large number of the impoverished part of our population.
I welcome that part of the Chancellor's statement dealing with the relief which is to be given to the poorer class of the direct taxpayers. In their case he is merely mentioning an appeal which from this side of the House has been urged for a considerable time, and the Government might have gone further in that direction than they have done. After all, it has not been a profitable experiment either in respect to revenue or general conditions of contentment. As I understand, there are about 5,300,000 persons in the country who are sufficiently well off to pay taxes direct. Prior to the addition of those who are now being dealt with, the number was very much smaller. I believe that of the number which I have given, about 4,000,000 persons were included in it by lowering the level of taxation, and as I gather from the figures which I have seen, these 4,000,000 persons paid together among them in a year to the revenue only about £8,000,000. Is it worth while, therefore, was it ever worth the while of the Government to have gone upon those lines in the hope of bringing into the net a considerable number of people who would contribute to the revenue? A total of
£8,000,000 from 4,000,000 people is roughly an average of £2 per person. In the main that was paid by the better-to-do industrial workers of the country. We look upon it as a tax upon their wages, and I am glad that the right hon. Gentleman is offering some relief to that class which was brought within the net in the manner which I have described some time ago.
I may not be speaking for all my hon. Friends on this side of the House in the few observations which I want to make with regard to the taxes upon beer and spirits, for in the ranks of labour, as in all other classes, different views are held and expressed as to what should be done on this question. I do not know whether the motive of the Chancellor in further increasing these already heavy duties is to diminish the consumption of drink. I do not know whether the propaganda which has recently reached our shores has in any way affected him and whether he is seeking prohibition by the instrument of finance rather by the ordinary instrument of the law. However that may be, I suggest seriously that in the case of beer and spirits duties are exceptionally high and severe. I say that all the more because the quality of the article has so seriously diminished that I am sure the right hon. Member for Paisley, when he referred to this subject and accepted these taxes as proper and as a national necessity, never could have consumed a single drop of the drink sold to the masses of the working class of this country. I doubt whether even the Chancellor of the Exchequer himself would dare to face the test of going to the bar of an East-end public house and asking for an ordinary glass of beer and consume it on the premises.

Mr. J. JONES: He would not be Chancellor of the Exchequer next year.

Mr. CLYNES: I speak what I know is in the minds of a large number of working men who deem themselves to be unfairly taxed by the high price, still to be made higher as the result of these duties. I do not know, in the case either of the better class of cigar or the richer wines or champagne, whether these articles have deteriorated in quality in the slightest degree either because of taxation or because of other by-products of the War, but I believe they have not; I believe the quality of the better class of cigar and champagnes and wines is as
good now as it was before the War began. I will make inquiry and set my mind at ease. At any rate, I will try to secure some knowledge of the facts upon what I confess is a matter quite beyond me. Judging by general evidence, by what one may commonly see, it would not appear that there is any serious deterioration in the quality of these particular articles. The point I want to make seriously is that if spirits and beer are to bear a still further financial burden, consideration should be given to the question of improving their quality and making them worth something like the price paid. I do not think that that suggestion can be regarded as any incitement to intemperance. We have learnt a great deal by the War, and if we had not I think we can trust to the ever-growing tendency on the part of the masses of the community to regard intemperance as an offence, not merely against the person but against good taste. This great growth in the tendency to temperance should give us some sense of security in making particular commodities like beer or spirits sufficiently good in quality to justify the heavier burden of taxation.
On previous occasions from this side of the House we have protested against the use of that enormous sum of money called excessive profits. I want to congratulate the Chancellor of the Exchequer on having returned to the advice which he previously rejected and on having gone at last some of the length along the road we suggested. I recollect that in the earlier years of the War, when this matter had first to be considered", we demanded that the whole of this profit, which was in excess of normal profits and was due to artificial conditions of trade resulting from the War, should be a profit of the State and should be used for the purpose of clearing off the debts of the country First we got 60 per cent., then 80 per cent. We tried for 100 per cent., but failed. At any rate, I am pleased that the Chancellor of the Exchequer has returned to the figure of 60 per cent. And perhaps before this subject is completely disposed of he will consider whether he ought not to go back to the figure of a year ago, namely, 80 per cent. A small point relating to this subject I will bring to the notice of the Chancellor of the Exchequer. In October last, in a reference to the devices which might be followed, or if not devices the conditions of neglect which might in-
volve delay in payment of these sums to the proper quarter, the attention of the Chancellor of the Exchequer was drawn to this tendency, and he made a statement to which I would like to ask his attention. The right hon. Gentleman said that if he continued to see signs of unjustifiable attempts to delay payment he would consider whether he must ask the House to impose interest on outstanding obligations. Perhaps the Chancellor of the Exchequer can tell the House whether in exceptional cases of negligence anything like interest has been obtained.
The speech of the Chancellor of the Exchequer was remarkable for the absence of any reference to a theme which is exercising the minds of a great many people in the country—I refer to the capital levy. He cannot dispose of this subject by any determination on his own part to ignore it or by sustained silence as a matter of policy. Indeed, he has been driven to get nearer and nearer to the central source of revenue, namely, capital; he is driven at last to touch the outer fringe of those great trading companies, combines, trusts, and various firms which will in due course have to yield some portion of their gains. On behalf of my hon. Friends on this side of the House I want again to press the necessity of considering seriously this method of obtaining money as a remedy for the financial situation. We may be charged with making this proposal for narrow and mercenary reasons. That charge would not be true. We have our country's prosperity at heart as well as men of other classes, and our conviction on the question is this: that in the War all classes had equally to face risks, equally to share burdens, equally to make sacrifices. The most that the rich man could give for his country while the War was on was his life, and the poor man had to give that. It was all that the poor could give, for nothing else had they. If during the War the poor gave as much as the rich could in defence of their country physically to save it, the poor man is now entitled to say that the rich man should give, in proportion to his means, in saving the country financially. We believe that that can be done without imposing any physical privations or real losses upon the classes who control and own capital. Our doctrine is not without support from commercial quarters, from those who have more expert knowledge in matters of
finance than some of us can claim. I could quote several men whose knowledge of economics and whose position in the world of political economy command respect, as among those who feel that we shall be driven to this device of resorting to extraordinary financial means to escape from extraordinary financial difficulties. Let me quote a statement recently made by the chairman of a very great firm in this country, Messrs. Cammel, Laird and Company. Mr. W. L. Hichens, writing recently upon this subject, said:
Our big loans were raised at a time when the sovereign was greatly depreciated in value, and it is right that a considerable proportion of it should be paid off before it returns to its pre-War value. The whole burden of the inflation should not be borne by posterity. There is a strong feeling in the labour world that capital, as such, should bear a greater share of the War burden, and it is, I think, of great importance, in view of the present industrial unrest, that capital should share its responsibility in the most open and most unmistakable way.
And so on. There is much more in sustained support of the proposals for a levy on capital. We on this side reject altogether what seems to be the settled doctrine of the Chancellor of the Exchequer, that the country must bear this burden for something like a generation, and year by year try little by little to escape from the difficulties which that burden involves. On the other hand, we say that this is a debt piled up in a very few years, that it is a debt which in a very few years, by the continuance of a little sacrifice, the country can be rid of. It is a debt the removal of which would give not merely relief and contentment to the poor, but very welcome relief indeed to many who are not classed as poor at all. Those who bear the very heavy burden of tax and super-tax upon ordinary incomes would soon feel relief if escape could be secured from the deadweight debt. So that it is as much in the interests of the country, of trade and commerce and business, as in the interests of the masses of the working classes that we press this doctrine of using a portion of the reserve capital of the country speedily to pay off these enormous debts. The interest alone upon this burden will find a problem yearly for every Chancellor of the Exchequer for a long time to come. Contrast that interest with the amount of money set aside by the State in relief
of those who suffered physically and fought for us to win the War, and you have a comparison very often present to the working-class mind. I know a man personally whose weekly income from the interest upon the money which he had invested in War Loan, after he has paid all his taxes and duties upon it, is not less than £400. There is a large number of men and firms and businesses deriving immense gains from the moneys which they invested in War Loan. I do not say that if they had placed the money elsewhere they could not have done as well or better. That is not my point.
What I mean is that in the working class mind you have the view that they are labouring hard to find revenue for the State, which in turn is converted into interest by the State to pay off the interest upon these enormous sums which are invested. £400,000,000 a year or thereabouts is the sum which has to be found as interest alone upon the debt which we are still carrying, or, in other words, nearly four times as much as we are paying yearly to those who physically suffered and fought for us to win the War. Soldiers, sailors, widows and dependents all put together get yearly as our acknowledgment of their sacrifices, and their services only about one-fourth of what we pay yearly to those who invested this money for the purpose of carrying the War through. I shall be glad to learn from the right hon. Gentleman that there is another side to the picture, but I think the figures and facts I have stated are beyond dispute. There they are, and I tell the Committee these facts have soaked into the minds of the working classes, and it would be well for any Government to make the mind of the nation easy by facing this problem rather than merely looking it in the face and passing on. We say, then, that a capital levy can be afforded without damage to trade or business or industry. We admit that it would not work fairly in the sense that it would be equitably and nicely balanced as between man and man and firm and firm. To say that against a capital levy tax is to say no more than is said against any and every tax. No tax ever imposed worked fairly or evenly. The spendthrift and the wastrel spends and wastes his money. He does not preserve, and you cannot tax him, and he escapes. The man who becomes prosperous through thrift and ability and business aptitude
and industry is taxed, while the other man goes scot free. That is an incident of every tax, and it is a commonplace of financial experience. Therefore that argument does not apply against a capital levy tax, any more than it does against any tax which any Member of the House may mention. I think I can safely predict if this doctrine is not seriously faced or supported now, it will be. The pressure of circumstances and events will prevail on our side until the Government finally is driven to give speedy relief to the nation that will not, and I hope will not, go on contentedly bearing this heavy burden, relief from which can be secured.
Towards the close of the right hon. Gentleman's speech reference was made to what, after all, is the fundamental fact facing us and which is at the bottom of all these problems, and that is production. Here again I think we are entitled to say that it is not the right thing in a country so highly civilised and so finely developed as this, to set off a section of its people to be its producers. We must all do our share, and if as a result of what we do extraordinary fortune and wealth conies to us, why then in an extraordinary way we should give back to our country that which we received as a blessing in such large measure. But whenever questions of production are referred to, people have in mind, I think, the ordinary manual workers or producers. [HON. MEMBERS: "No, no!"] I am glad that many Members of the Committee are disposed to speak for themselves. I speak of what is one's common experience. When we think of the question of production, we think in terms of the men who build houses, of the plumber, and the carpenter, and the labourer, and the engineer. Those generally are the people we are thinking of when we touch the question of production. I have sometimes incurred the displeasure of other working class leaders, and of working men themselves in presenting to them my view on this question of production. They think that if working men produced more they are only further increasing the profit of the employers and the privileged classes. In that conclusion I think working men are entirely wrong. It could well be that the profiteer does worse when there is plenty than when there is a state of scarcity. Indeed, it is a fact that the profiteer in his special capacity of to-day is a product of the War, which was a period
of scarcity. These extraordinary profits come not out of a market choked full of the commodities required, but out of a market where there are few commodities to choose from, and, though it may be true that some employers of labour and capitalists would derive some benefit from increased output or greater production, I am perfectly satisfied that far greater benefits would accrue to the masses of the poor.
We seem to be agreed then as to the wisdom of securing by whatever means we can greater output of commodities. Commodities are the wealth. All these figures used in Budgets are mere tokens. All the paper money and the metal which may be behind that paper merely represent wealth. The wealth we have can be reduced to one word, and that word is "work," or, in its place, production. The workers of the country have naturally sought to get their hours of labour reduced, and they have seized their opportunity due to increasing strength and to other causes, and the indispensability of labour, and the dependence of the country upon them for its daily life. All those things have presented themselves to the working class mind as a special opportunity which caused them to press their demands. I think it is a matter of regret that the workers have had to press them too much at one time. In other words, it would have been better for the country if many of these concessions could have been spread over a longer period of years, but, unhappily, working men were not, taught to look at matters in that manner, because before the War when employers of labour could easily have given something from their great store and their increasing wealth, they never did so until they had to. It was usually in response to the strike weapon or the threat of a strike that employers yielded even the slightest concession. In those days the employing class behaved very foolishly indeed. They taught working men how valuable was the instrument of force, and they have been thinking somewhat in the terms of that doctrine since. So that if we are to get under these conditions of reduced hours and other improvements in the factory and workshop life of our country, and if we are to get increased output, it must be as the result of improved conditions of management, and greater co-operation between the
workers and the employers in the workshops. It must come as the result of the more complete use and the more skilled use, and the more scientific use of all manner of devices and appliances that can be used to help the workmen to secure the utmost result that is obtainable from their physical efforts. In a dozen or score of ways you can, the country can, employers and workmen can, devise methods for improving output, and therefore, as I say, increasing the volume of commodities and cheapening the price of the commodities which the working classes require. In that very effect of cheapening you would have extended to the working classes of this country something equal to a substantial advance in their wages.
Let me tell the Committee that I think we shall not reach any one of those results unless somehow from the State or the industries of the country there may be given to the working classes that consciousness, amounting almost to a guarantee, that extra work to-day or improved exertion for the moment to produce greater output will not be the cause of throwing men out of a job to-morrow. That is really the main obstacle to an acceptance on the part of the working classes of this country of this very important doctrine of enormously improving the output of commodities. Here, again, the working man thinks in the terms of his former experience. He found the market overstocked because he worked overhard and long hours to produce, and he was thrown out of work because he produced in abundance. I think we have reached a stage, or certainly ought to, where over-production never again should be allowed to be the cause of a state of unemployment. I know it is not easy for the Chancellor to give a guarantee, nor for any man to give a guarantee, which will be accepted by the working classes of this country, but it ought not to be beyond the power of the Government collectively to frame some policy and to give out such an assurance as will satisfy the working-class mind. In that condition of affairs, I should hope they will do it. It is well worth while, because it is so exceedingly important as an item in the question of national welfare to try and give to the working classes this assurance, that in-
creased exertion and extra work to-day shall not mean unemployment and impoverishment to-morrow.
The other condition which I suggest to the Committee is equally indispensable, though I am sure that in this suggestion I shall not carry many Members of the House with me. It is this. There is still an enormous amount of wealth in store in this country in the control of a comparatively small section of the community. I pointed out earlier that the people under the new proposals of the Chancellor who will have to pay the tax will number a little more than a million out of the forty millions of our population. That indeed shows that there is not that wise and equitable distribution of wealth of our country which there ought to be. You will have to satisfy the working-class man that he is to have a higher level of subsistence and a better standard of life than he had before the War. You can depend upon it, and in this I think he is quite right, that he will not slide back to that condition in which millions of working men were placed before the War. So that one contribution towards the solution of this problem would be that the rich and more favoured people of the country should share more of their reserved wealth with those who shared the risks of war with them.
You cannot translate that sentiment into actuality except by guaranteeing to the workman that higher standard of life which he claims for himself, and which during the opportunities of the after-War period he has tried to secure. I know that this is only touching just the fringe of two or three extremely important topics, but they all have their bearings upon the question of prices and upon the question of revenue, so that I think even a Budget Debate should not rule them altogether out of consideration; and I say that we on this side of the House, while welcoming two or three of the more courageous proposals of the Chancellor, must express our disappointment that he has given so little attention to the proposal submitted from these Benches boldly and drastically to face the enormous debt which weighs us down, and as we think that cannot be done and cannot be accomplished until it is faced upon the lines of taking some part, and taking it in my judgment only for once,
of the enormous capital reserves of this country in order to pay off the huge debt which necessarily the War imposed.

Mr. PRETYMAN: I am sure that every hon. Member, at any rate on this side of the House, who heard the speech of the right hon. Gentleman who has just sat down will agree in the main with the latter part of it, and will agree that if we are to return to prosperity it can only be by increased production, which can only come by some concert which will secure that all classes who are interested in production will work together. That is the real problem. It is one that cannot be discussed at length on the Budget, but with that part of the right hon. Gentleman's speech I should be in general agreement. I would only remark that the ideals which he sought are ideals which everybody would seek, but are extremely difficult of attainment, not because of want of human goodwill, but because of the working of certain natural laws of supply and demand which affect the human transaction in a way which is perhaps insensible, but which is all-powerful, and which is extraordinarily difficult to deal with, when we are dealing with conditions such as those of the present and legislating for what conditions may be in the future. Our unfortunate experience is that, whatever position we are in, the classes concerned are apt to look back at experiences of the past under wholly different natural conditions and to refuse to work together to-day because of the experience of the past. The question is, is it possible in this day of inflation and short production to have sufficient prevision to make such arrangements that when inevitably, in a few years, a time of plenty comes again, and when there is again real competition to sell—because everything is inverted now and there is competition to buy when the natural thing is competition to sell—the working class in the "normal" day shall not drop back into the rut which the want of competition for their labour may produce? All I can say is, that, so far as I can speak for employers, which I do not claim to do, but I believe I should be speaking the opinion of every employer if I said that they would be desirous of entering into such arrangements. It is only by such arrangements that we can return to normal prosperity at all. It is all very well to look forward as though
that return to prosperity were a certainty. It is not a certainty. Unless we do succeed in working together we may not return to prosperity at all. We may have a most serious time before us, in which it may not be a question of whether this class or that class has more or less wealth with which to pay taxes, but it may be a question of whether there will be enough food and living for the whole population of this country. That is a most serious matter, to which I hope this House will not have to give its attention.
The right hon. Gentleman said a good deal about the question of a capital levy. I do not think there is anyone in the country who would not agree in principle and in theory that if a capital levy could be raised upon the great accretions of wealth made by certain individuals during the War, that would be a most desirable result which the House would be willing to legislate to obtain. When one heard the suggestion of a capital levy on those lines, I think everybody was well disposed to it, but you must deal with these things in a practical way, and when it comes to the question of a valuation and of ascertaining exactly which wealth did accrue during the War, and is in excess of a reasonable increase due to the altered value of the sovereign, then you get into extraordinary difficulties, difficulties akin to those which led to the funeral oration delivered by the right hon. Gentleman the Member for Paisley (Mr. Asquith). I think we have had nearly enough experience of valuation in those land value duties. People who are not accustomed to valuation seem to think it is an exact science, but valuation is not an exact science and never can be, and any arrangement which is based upon the difference between two valuations rests upon extraordinarily insecure foundations. Everybody knows that there are variations in value which are very wide indeed, and when a valuer is making a valuation for any employer, or with any purpose, he will go to that side of the limit of value which serves the purpose he has in view. Another valuer, taking the opposite view, will go to the other limit, and then the ordinary course of business is that there has to be an arbitration between the two. When there is a single ad hoc valuation, that is a comparatively simple matter, but to attempt to value at one time the whole of the capital assets of this or any other
country is a proceeding which is almost impracticable and most extraordinarily difficult. There is a Committee sitting upstairs, and I do not want to argue the point now, but I think the right hon. Gentleman must realise that it is not the objection on the part of any of those who sit on this side of the House to the principle of levy, it is the objection, first of all, to the practical difficulties, and, secondly, to the extraordinary dislocation of business which it would cause. That, again, is the objection to a capital levy in any form, because this capital is not buried at the bottom of the sea, from which it can be extracted. It is all engaged at this moment in the capitalisation of businesses which lead to production. That is the real trouble, and that seems to me to be the real question at a moment like this for the Chancellor of the Exchequer: how far is he justified in taking capital and wealth from the productive processes of the country at this moment, which is of such vital importance to us, in order to seize this moment of inflation, which is also vital, and which will never recur, to take money to pay off the debt on the same basis of inflation? All I can say is, speaking with all humility, that I think the Chancellor on the whole has chosen a wise and middle course. The burden of taxation of £1,400,000,000 is enormous, but we have not a very good time before us, and if we do not now, at this particular time of inflation, raise every penny that we possibly can raise by taxation, without crippling the industries of the country, the opportunity may never recur. There is no doubt that in the future we may have to face lower prices, and great difficulties will be experienced in raising money, and now is the moment when the debt can be most satisfactorily dealt with.
The right hon. Member for Paisley made a very interesting funeral oration upon the Land Value Duties. It is not aften that the parent has the privilege of pronouncing a funeral oration upon his own offspring, and I notice he attributed its decease to the fact of its having been crippled and mutilated after its birth. I should rather venture to suggest that its decease was not due to the mutilations which it received after its birth, but to inherent defects and to a very bad constitution. I do not know whether it is
attributable to heredity or not, but the infant at the time of its birth was dressed in such wonderful clothes, and was taken round the country so disguised in garments and decked with flowers, not to speak of refreshing fruit, that the country was deceived into imagining that it had a sound constitution behind it, and the only thing that I regret is that so many of us were deceived by those outside appearances into spending more time than we need have done in the crippling and mutilating process, because such was the constitution of the infant that, even if it had never been attacked at all, it must have come to an untimely end. Of that there can be no possible doubt. There is a moral to be drawn from that, and that is, that however theoretically desirable a tax may be and however easy it may be to defend it on the platform, it must be a practical measure, and it must be based upon sound and well ascertained principles of finance before it can be a financial success. I venture to say that any merit which the Land Value Duties had was purely political. It was a political tax and not a financial tax, and it served its political purpose, I suppose, sufficiently in more ways than one. I will not enlarge upon that.

Dr. MURRAY: Poor Prime Minister!

6.0 P.M.

Mr. PRETYMAN: Possibly so, but the Prime Minister has had other children since then, of which the country is sufficiently proud to forget that one, and I for one, as I have already said in the House, do not desire to throw any blame on the Prime Minister. He was misled by others in this matter, and with his usual enthusiasm he boomed this particular baby, with the result which the right hon. Gentleman has mentioned. Politically, that tax was a success for the time being. Financially, it has been from the first, as it was bound to be, an utter failure, not because it was mutilated, but because it was inherently unsound. It depended upon impossible valuation. It depended upon impossible values, which has had serious consequences. If it had not been for that tax, so far as figures and experience can guide us, the country would at this moment have 200,000 more houses than it has to-day, and it is not putting the value of those houses too high to-day to put them at £1,000 a piece, and on that basis there would be £200,000,000
worth of house property in this country to-day but for the incidence of that taxation. Unfortunately, now that the taxes are to be removed, other obstacles have arisen which are well known to the House, and although I do believe the removal of these taxes will do more than any one act of the Government to restore prosperity to the private building enterprise of this country, still the difficulties of price and of material are so great that the repeal cannot have the same effect now that it would have had had it taken place several years ago as soon as the failure of the taxes became apparent. However, they are, I hope, to be now taken off the Statute Book, and I hope my right hon. Friend, whose earnestness and honesty every hon. Member recognises, will be careful, when he tries to support the right hon. Member for Paisley in reviving this corpse, to look at its financial and not only its political side. If he does that, I am quite confident that the date of its revival will be long after he or I have anything to do with this House.
There is another root principle which, I think, is important. It is practically impossible to raise taxation except for realised value. To attempt to tax something which has a value which is not realised, or perhaps realisable, at the time, is to impose a maximum of burden for a minimum of result. It is the great merit of the Income Tax, that the burden is levied wholly and solely upon realised income; if a man realises less income he pays less Income Tax, and if he realises more income he pays more Income Tax. The same applies to Death Duties, so far as it can apply, that when a man realises a fortune which is left him by somebody else, when it actually passes to him, he has to contribute something to the State. But to attempt by mere valuation to place a value upon any article or any commodity which cannot at one and the same time be realised, and to attempt to realise what is not a money value at all, and convert it into money value for the payment of tax, will greatly exceed any advantage the country may derive from that kind of taxation. In an otherwise very fair and evenly-balanced speech, my right hon. Friend opposite thought right to refer to the exactions and exploitations of landowners. He made a very violent attack upon them. I do not know whether he has any personal experience of the dealings of landowners in this country with those with
whom they have business relations. I can hardly think, with the responsibility he has, that he could get up and make that statement simply from some cheap political pamphlet which may have reached his hands in earlier days. I suppose he will admit that of all classes in this country who have derived the least advantage from the War it is the agricultural landowners. [HON. MEMBERS: "Oh!"] Hon. Members opposite seem to doubt that statement.

Mr. J. JONES: I doubt your right to own the land at all.

Mr. PRETYMAN: That is another matter. Somebody has got to work it.

Mr. JONES: The people can work it without you.

Mr. PRETYMAN: That may be your opinion. If you had to manage an agricultural estate, you might not think so. The hon. Gentleman wants houses. The only places where he would find men who work on the land properly supplied with houses are on well-managed agricultural estates. Houses were provided as a duty long before the hon. Gentleman was discussing the subject at all, and these houses in rural districts, with five rooms and with a quarter of an acre of garden, and all necessary appurtenances, are let at eighteenpence a week.

Mr. JONES: Eighteenpence too much.

Mr. PRETYMAN: The hon. Gentleman says " Eighteenpence too much." That is a measure of his reasonableness, and I do not think it is necessary, after that remark, to deal with him any further; but, directing myself to the right hon. Gentleman opposite, who does, I am sure, desire to deal with these matters in a serious spirit, I do suggest to him that when, at the conclusion of his speech, he pointed to a desire that the classes in this country interested in production should work together, there is no class which has more difficulty at this moment in doing this than the owners of agricultural land. It is a time of extraordinary difficulty, because the burdens upon them are almost more than can be borne, and the right hon. Gentleman can see the result of that in the way that hundreds of thousands of acres of land all over the country are being sold, simply because the owners cannot support them. I do not complain that that land is being sold; I only point to it as a proof that the land
is being sold because it does not yield sufficient income to the owner to bear the burdens put upon it, and to support him in any form whatever.

Mr. CLYNES: Perhaps the hon. Gentleman will allow me to say, in case there should be a mistake, that when I used the term which he quoted, I was not thinking at all of land put to agricultural purposes, but of land put to other uses.

Mr. PRETYMAN: I am glad to accept that correction, and I hope it will not go forth to the country that it is his opinion and that of his Party that agricultural landowners are making exactions and extortions from those with whom they have to deal. If he knew what the reality of the situation is, I am sure he would take exactly the opposite view. If he were referring to urban owners, of course, there it is always debateable ground, when owners are of all classes and all denominations. There is an enormous amount of urban property and ground rents in this country owned by associations of working men, insurance societies and others, and it is not all by any means in the hands of large landowners. I do not propose to argue that question now. So far as taxation is concerned, money which is invested in that particular form of property bears exactly the same burdens as money invested in any other form of property. There is one other point of the right hon. Gentleman's speech to which I should like to refer. He compared the amount of the revenue which was expended in the service of the National Debt with that which was spent upon war pensions. I think his comparison had force, but if he looks at the figures in the White Paper he will see that another comparison can be made. The figures of the service of the National Debt for the present year are £320,000,000 not £400,000,000 as my right hon. Friend said—and if looks at the Civil Service Estimates he will see that the total of those Estimates for the direct benefit of the working classes, including War Pensions, amounts to very considerably more than the sum for the service of the National Debt. The items of Public Education, Old Age Pensions, the Ministry of Pensions, the Ministry of Health and the Ministry of Labour together come to almost exactly £300,000,000, and the Bread
Subsidy is another £50,000,000, so that there is £350,000,000 of the Civil Service Estimates going into the pockets, directly or indirectly, of the working classes as against £320,000,000 for the National Debt. I think it is only fair, if the right hon. Gentleman's statement goes out to the country, that this statement should also go to the same people, to show that the Estimates are not so disadvantageous to them as would appear at first sight. I would like to ask, in the absence of the Chancellor of the Exchequer, a question of the Financial Secretary. Can he tell me whether the Corporations Tax applies to Co-operative. Societies or not?

The FINANCIAL SECRETARY to the TREASURY (Mr. Baldwin): I do not think, in the absence of my right hon. Friend, I can state the exact scope of the tax, which has not yet been settled, but which will have to be settled before the Finance Bill is drawn.

Mr. PRETYMAN: Of course, the word "Corporation" may include a good deal.

Mr. BALDWIN: It might include anything.

Sir F. BANBURY: May I ask whether the proposed Company Tax applies to statutory companies as well as to limited liability companies?

Mr. BALDWIN: I cannot give a definite answer on that point.

Mr. PRETYMAN: It is rather important. I quite agree with the right hon. Member for Paisley in saying that the Corporations Tax is much more closely allied to the Income Tax than it is to the Excess Profits Duty, and if it applies to Co-operative Societies it might be to some extent a solution of that most difficult problem which was considered very carefully by the Income Tax Commission. It was perhaps one of the most, and, I should say, perhaps the most thorny subject we had before us, and the Committee can see for itself the various reports and reservations which were issued by the Commission on the subject. I think the Income Tax Commission, on the whole, may congratulate itself upon the reception of its proposals by the House so far as they have been before the House. It would not be proper or necessary to discuss those now, because we shall have the bulk of them embodied later in a separate Bill, but I would just say this.

The right hon. Member for Paisley remarked upon the reduction in the sum levied in Income Tax during the current year.
The financial proposals of the Income Tax Commission were so balanced, according to the estimate given to us by the Inland Revenue Department, that if they were all carried out the net result would be almost an exact balance, to be perfectly accurate, again in that, I think, £214,000. So that the only reason, as I apprehend the right hon. Gentleman, why there is a loss of Income Tax this year or a lower sum is to be raised than otherwise is because only a small part of the proposals—and those the parts which give relief—are included in the present statement. If later in the Session a further Bill is introduced, and those proposals of the Income Tax Commission which do not give relief, but which will result in the raising of further revenue, are embodied in that Bill, and passed by the House, this balance will be restored, and a considerable sum raised by Income Tax which, for the current year, should be at least as great as it would have been if all this relief had not been given. I feel, again, that if all the recommendations of the Income Tax Commission are eventually carried into law the final result will be to increase rather than to decrease the revenue from that source. There are a good many leaks which will be stopped. Those leaks, had they remained, would only have tended to increase the loss.
Just one word upon the petrol tax. This is a very vexed question. I was extremely glad to hear the Chancellor of the Exchequer say that the whole of the money raised by the petrol tax will go to the maintenance of the roads. It is, therefore, not a tax in the ordinary sense of the word. Personally, I would rather see it excluded from the Budget as part of the ordinary taxation of the country. It is a payment by road-users for the construction and maintenance of the roads which they use, and it is not a tax at all. I think that the primary consideration which road-users would have in considering this tax is whether they are going to get better roads. The present condition of the roads is disgraceful, and with this new method of taxation—which I will not discuss now beyond saying that I think, on the whole, a change is necessary, and that it will have one result, which is a very im-
portant one—there will no longer be any deterrent to the Government assisting private enterprise to do its best to provide some source of home-produced motor-fuel. At present, when the whole revenue can only be drawn from an import duty, it is obviously against the interests of the Government to encourage home production of motor-fuel. This change ought to put the Government and private enterprise into line. I believe that if the community sets itself to work to develop the important supply of cheap motor-fuel, the whole of the burden of this tax upon the motor industry may be got back in that direction. If that is done, it will be a happy result.
The Budget which we are discussing one must, I suppose, regard still as war taxation. We are so little removed from the period of the War that we who are paying heavy burdens under it are content to pay in the same spirit as we paid the taxes during the progress of the War. The one fear which I would express is that that section of the community which does not contribute much directly to this form of taxation should imagine that this level of taxation could possibly be permanent in this country. As war taxation, and as a temporary level of taxation, it is possible, and it will be upheld, but as a permanent measure and basis of taxation, and as a permanent level of taxation, it is absolutely impossible. When we get back to the normal year, to which reference has so often been made here, and which, I agree, will not come very soon, when we do get back, I sincerely hope that reductions of expenditure which may be made in one direction will not be met by extravagant increases in other directions for political purposes, for this will eventually fall back on those who propose them. In that spirit I welcome this Budget, and in that spirit I shall have great pleasure in supporting it.

Mr. SEDDON: Any Member of this House in years gone by will not begrudge the last speaker the evident enjoyment which he has expressed this evening. Those who happened to be Members remember very vividly his pertinacity, and certainly his doleful story of what would happen when these taxes were proposed. I suppose now he will lay the flattering unction to his soul that his prophecies have become a reality. I would remind him in the exuberance of
his joy that we have still the machinery left with us, and that that machinery may be put to more useful purposes at no distant date. The right hon. Gentleman was certainly justified in securing from the right hon. Gentleman opposite (Mr. Clynes) a modification of his charges against landowners. I am quite sure, so far as the large landowners are concerned, no one could truthfully make extravagant charges against them. Having said that, I think the right hon. Gentleman himself will agree that land values, so far as urban sites are concerned, which are created entirely by the community, are a just source of taxation when it is done on a proper, fair and equitable basis.
The Budget itself has received very little criticism. The speech of the right hon. Gentleman the Member for Paisley was one more of blessing than anything else. I carefully listened to it, and I am quite sure that the Chancellor of the Exchequer does not feel his withers unwrung by the criticism that came from that direction. I should like to say one or two words in reference to some of the proposals in the Budget. I join first in the chorus that this is a courageous Budget. It is a Budget which is receiving universal condemnation, but I think it will, as time goes on, redound to the credit of the right hon. Gentleman who is responsible for its introduction. I would almost call it a stupendous courage in the suggestion that he has made, that he anticipates in 26 years we shall have paid off this colossal debt which the War has left around our necks. I dissent from the right hon. Gentleman the Member for Miles Platting, for he seemed to carp at the suggestion that 26 years was too long to take in paying off this responsibility or meeting this obligation. I venture to think that the courage and optimism of the Chancellor will be modified as the days and years go by. But in any case, I am strongly of opinion that a Chancellor of the Exchequer who has the audacity even to make the suggestion that we are able to shoulder this responsibility, and that we may liquidate our liabilities in 26 years will have a profound effect upon the rest of the world. I can conceive of no statement made in this House during this Parliament that will create more astonishment in the minds of the peoples of every country than that made by the Chancellor that he has the courage, the
faith, and the belief that we are able and strong enough to liquidate this gigantic responsibility in so short a period. I believe it will be one of the adjuncts to stabilising our credit in the world. The statement of the Chancellor will undoubtedly be in the interests and on behalf of the good name of this country.
I want to call the attention of the hon. Gentleman in charge of the Bill at present to a little grievance that I have. It has been said by the right hon. Member for Miles Platting, in his remarks on the beer tax, that the quality of the beer is not as good as it was in pre-War days; that, while wines and cigars have maintained their quality, beer has suffered some reduction in quality. Be that as it may, so far as beer itself is concerned, it is bearing a very heavy burden. I believe the tax per barrel is £5, when before the War it was 42s. This may be justified by the needs of the country, but why did the Chancellor, who has given such evidence of courage, shy at a new source of revenue so far as the drinks of the people are concerned. I cannot for the life of me see why ærated mineral waters have been left untouched. The right hon. Gentleman may say that it is difficult to tax such a commodity. I think it will be found as easy to tax ærated mineral waters as it is to tax patent medicines, and beer. I quite agree that a tax on non-intoxicating beverages would be a very difficult problem, but a tax on ærated waters which are entirely manufactured, not in the homes of the people, but in manufactories, would be an easy proposition, and I fail to understand why the teetotalers are let off scot free, and that mineral waters, which are beverages to one class of persons, just as beer, wines, and spirits are to another, are not bearing their quota. To that extent I regret that at least a penny per bottle has not been put on as a start. It might have been two pence next year. Then those who confine their drinking to mineral waters would have some sympathy perhaps with the beer-drinker, who now has to pay 7d. instead of 6d. for his pint of beer.
I want to make one observation with reference to the tax on motor-cars. I think the basis is all wrong. That is my opinion. I have not got a motor-car, and therefore I am not speaking per-
sonally. I think the real item to be taxed is petrol. We all know that the ordinary person of limited means who possesses a motor-car unfortunately possesses one of foreign origin, and this is because it is a cheap vehicle. I believe it is useful to have a vehicle, although there are things said about the motorcar to which I refer, but which shall be nameless. But I say that the average horse-power of these cars is something like 20. You are going to make—I will not say a victim of the man who can afford a cheap car. [AN HON. MEMBER: "Is it the Ford?"] You are going to make him pay heavily for the luxury of owning a car, whereas I think you ought to make him pay for the mileage run, and that would be a petrol tax. In another direction it is going to hurt the motor industry of this country. You have a large number of cars that are being made at fairly moderate prices, but the engine power is much less than in the one to which I refer, though the total cost of the car is considerably more. Therefore, I would like to call the attention of the Chancellor to the fact that in this reversal from the petrol to the motor tax, there is great danger that injury will be done to this great industry which I want to see developed here, with fewer foreign-made cars than we have at the present time. In conclusion, whatever may be the resentment in some quarters, I trust the result of this Budget will be not only to secure revenue, but to give confidence to the rest of the world that the old country is not yet done.

Sir W. JOYNSON-HICKS: My hon. Friend who has just sat down dealt with the petrol and motor car tax and with beer in which I am not immediately interested. Speaking as a teetotaler, I should welcome an opportunity for teetotalers to take their share in this kind of taxation. I have often wondered why the Government has never charged teetotalers something on such drinks as soda water and ginger beer.

Mr. BALDWIN: We are already taxing them to the extent of £1,500,000.

Sir W. JOYNSON-HICKS: I want to make it quite clear that, so far as I know, teetotalers are not a whit behind the beer drinkers in their readiness to pay their share of taxation. I agree with what has been said as to the courage of
the Chancellor of the Exchequer, in producing these new taxes and inflicting them upon the country, which obviously does not want to be taxed. I associate myself with a good deal that fell from the Leader of the Opposition to-day. After all, there is something more important to the Chancellor of the Exchequer than imposing new taxes, and that is insisting upon economy. One finds all over the country a feeling that the Government has not done all they ought to have done to ensure economy. It would be a much greater honour to the Chancellor of the Exchequer if he could save £200,000,000 in the expenditure instead of providing another £200,000,000 by taxation. I believe I am speaking the feelings of the vast majority of the House when I say we do regard the Chancellor of the Exchequer as having a greater duty than merely getting in money. Last year I remember hearing the Chancellor of the Exchequer say that we can get through with this or that Budget provided the. House of Commons does not place any further expenditure upon the country. The Government is the real power in this House. It has an enormous majority, and if for the last six months they had said, "We will not have this or that subsidy," the House of Commons would have supported them. The Chancellor of the Exchequer comes forward and he says, "It is not my responsibility but the responsibility of the House of Commons, because this House has voted further expenditure." We would like more guidance and control from the Chancellor of the Exchequer with regard to economy.
I want to ask the Minister of Transport a few questions with regard to petrol. I do not want to make an atatck upon the Government with regard to their change of policy from a tax on petrol to a tax on motor-cars, but I want to ask the Minister of Transport whether he is going to adopt the change over from a system of petrol to motor taxation, and if so, is he going to adopt the whole of the report of his Committee upon which this new taxation was founded. The Committee were very guarded in their proposals to change over from petrol to motor-car taxation and taxing the horse power of vehicles. The Committee laid down a policy which I have always advocated, namely, that any tax on road transport is bad. When our forefathers did away with the turnpike system they did so because they believed it was in the interests of the country and
of commerce and transport as a whole, and they thought that for those reasons there should be no road taxation at all. They thought it was wise to put the cost of keeping up the roads on the rates and not on the individual user of the roads.
Now my right hon. Friend is proposing to go back upon that principle, but his own Committee, whose report he is following, make it perfectly clear that in their view, when the present emergency is over, and when the present stringency of finance has come to an end, they look forward to the time when the maintenance of the roads will again become the duty of the National Exchequer more than the local exchequer, and that controlling this road taxation will not be a permanent factor in the taxation of our country. It is for the benefit of the community at large, and not merely great commercial undertakings and agriculturists, that we should have the cheapest possible form of traction and the best possible kind of road. I want my right hon. Friend to tell us whether this Committee, which is very largely a Committee of Government servants, were not told at the beginning of their inquiry that the Chancellor of the Exchequer had made up his mind that the petrol tax must go.
The right hon. Gentleman almost made the same announcement in his Budget statement last year, and he asked me if I would get my friends together and try to form a taxation scheme other than on petrol, and he asked if we could agree upon any form of taxation that would be as fair as a petrol tax, because in paying on petrol you paid according to the amount of use that was made of the roads. I want to ask whether he is convinced that this tax, which is now being taken off petrol, will not in the near future get back again on petrol. I have seen a statement made by Sir Marcus Samuel, on behalf of his company, that immediately the petrol tax is taken off they will take 7d. off the price of petrol. My right hon. Friend knows the history of that great combination. We all know how the price of petrol has been forced up, and one has not merely the statement of motorists on this question, but there is also the report of the Central Committee on Motor Fuel under the Profiteering Act. There was a Government Committee for the investigation of prices appointed by
the Board of Trade, upon which there was a very great number of Government officials, and this is one of their findings:
We have considered the effect of the present import duties upon the price of petrol, and we are of opinion that under existing circumstances the users of petrol in this country would not be likely to obtain the full benefit of a remission of a reduction of this duty.
I believe we are going to get the benefit immediately of this reduction, but I do not think it will be long before the price goes up again. The report further states that:
So long as any special taxation is thought to be necessary in the case of motorcars, we consider the taxation of motor fuel more equitable than a tax on cars.
They also arrived at this finding:
That the present high prices for motor fuel are merely due to a demand exceeding the world's present supply, and advantage is being taken of this tendency by various financial interests to raise prices.
That is not the mere ravings of a motor maniac. We want some more assurance than the mere statement that petrol will immediately go down, if those of us who are motorists agree that this money should be collected from us in the way we agreed upon in order to spend it upon the roads for damage done. I do not see how we damage the road more than other vehicles, and I should like to ask the Minister for Transport if he has considered the question of other road vehicles. I see nothing at all in this report about the taxing of other road vehicles, such as the huge wagons with iron-shod wheels, which cut the roads up far more than rubber-tyred wheels. If you are going to go back to the old system of the turnpike, where every individual vehicle paid its share of the cost, why are all vehicles not included in this taxation?
Why did not the right hon. Gentleman's Committee in considering that branch of the subject, which was clearly within their terms of reference, deal with the question? I want to ask another question, and it will depend upon the answer whether some of us will say "Aye" or "No" in the Lobby in regard to this taxation. The Committee recommended that old motor cars, the engines of which were built prior to 1913, should have a 25 per cent. reduction, but I see nothing about that in these proposals. If my right hon. Friend is going to found
himself on the Report of this Committee, that question ought to be dealt with. I see that the mode of calculating horsepower is to be altered. I see in the Resolution passed yesterday that my right hon. Friend is going to make Regulations of which we in this House are to know nothing with regard to the units of horsepower. The Resolution says:
The unit of horse power for the purpose of duty under this Resolution shall be calculated in accordance with Regulations made by the Minister of Transport.
In other words, the House of Commons hands its powers over to the Minister, and I ask the right hon. Gentleman to explain to the House what he proposes to do in regard to them. Finally, I want to put this in regard to the transfer of the tax from petrol to horse-power. Is it fair to the users of motor cars? Will it not really be an inducement to the man who has paid his tax once and for all to say," Never mind whether there is a shortage of petrol. It does not matter what petrol I use now. I may as well use as much as I can." A Member of this House told me this afternoon that he had a Rolls-Royce car which, owing to the shortage of petrol, he had hardly used. He had instead used a smaller car. But that Rolls-Royce car is now to be taxed to the extent of something like £60 a year or more. What does that mean? The owner will naturally say, "I will no longer keep the car in the garage, I have to pay this tax and I may as well have the use of the car." We all know there is a shortage of petrol. Everybody knows it may be necessary even to go back again to rationing it. I would like the right hon. Gentleman to consider under these circumstances whether it is not desirable to keep on the petrol tax for another year, so as to limit the consumption of petrol, rather than to turn it on to horse-power, which would undoubtedly, I think, tend to cause men to use their high power cars more than they have been doing of late.
I do not know whether hon. Members have read the interesting schedule of figures attached to the Report quoted by my right hon. Friend. But from them it may be gathered that if a man runs his car 10,000 miles in a year, practically speaking, the taxation will be the same as if it were on the basis of 6d. per gallon of petrol. If he runs it 7,500 miles there is slightly higher taxation. If he runs it
5,000 miles per year he gets less taxation by a tax on petrol than by a tax on the motor car, and if he only runs it 2,500 miles a year, then there is a very great saving in taxation and a corresponding saving in petrol, which is rapidly becoming the life-blood of this nation. We want to know further what are the intentions of the Government. We want to have more information from my right hon. Friend, and I invite him to answer the questions which I have put before him, in order to enable us to have a clearer view of the whole of the facts, and to come to a more definite conclusion as to whether it would not be fairer to keep on the existing form of taxation than to try the new one he suggests.

Sir RYLAND ADKIN: Although I am quite sure that my right hon. Friend the Minister for Transport will listen with great care to what the hon. Member who last spoke has said, I hope he will not take my hon. Friend as being a final and complete guide in this particular Department of the Budget. Others of us especially interested in local authorities and in the administration of the roads know that the first and most important thing is to get an adequate amount of money from the Exchequer to deal with that most serious local administrative problem.

Sir W. JOYNSON-HICKS: I have not suggested in any way that the total taxation on -motors should be lessened. We quite agreed that the proposal put before us by the Chancellor of the Exchequer— that we should raise £7,000,000 for roads— is a fair one, and we are quite willing to accept the suggestion.

7.0 P.M.

Sir R. ADKINS: I had not finished my sentence. I was going to say I hoped my hon. Friend would not be taken entirely as a guide on the matter. We who are specially concerned in road administration are greatly impressed with the very grave condition of the roads of the country and the very large sums of money which must be forthcoming for them. This is not merely a question of ordinary road maintenance; it is a question of reconstruction as much and as acutely as the rebuilding almost of the devastated areas on the Continent. Many of the roads of this country have been ruined by the War, and therefore I want my right hon. Friend to approach this problem in the light of the primary importance and
necessity of raising very large sums of money. While I do not say that the matter should now be prejudged or decided, for the view as to the alternative method is one which the Government will no doubt consider in connection with the questions which my hon. Friend has quite properly asked, I do suggest that the first thing is to get an adequate sum of money, and in dealing with that one has to note the fact that if you continue indefinitely the tax on petrol—I do not bind myself to the particular adjustments suggested— and if you only have a tax on motor spirit you must have it on all kinds of motor spirit—as otherwise tax some of the very heaviest vehicles using the roads and using them to the great detriment of the roads, will escape paying, because they use oil which is not subject to taxation. I therefore want my right hon. Friend to look at the other side of the question.
In the very few remarks I desire to make I wish to join with the other speakers in congratulating the Chancellor of the Exchequer on his courage. I believe most, if not all, in this House, and most of the public, are glad that he should have faced the real grave problem of the hour, and that he should have envisaged a position which requires heavy sacrifices from the whole community to be continued for not a few years if the country is to recover financially from the War and to regain the position which it formerly held. I think that his proposals in this Budget will in the end receive the support of this House and of people outside. I confess I am one of those who, in this extraordinary topsy-turveydom period in which we live, can agree with every word said by the right hon. Gentleman the Member for Paisley (Mr. Asquith), and yet feel that there is nothing inconsistent in cordially supporting the Government in the main details of the Budget, and in doing all one can do to facilitate its passing into law. I should like, indeed, to say that while I agree with the right hon. Member for Paisley in the regret he expressed at the dropping of the Land Value Duties, I do not begrudge my right hon. Friend (Mr. Pretyman) his cordial enjoyment of the war dance which he performed over their fate; but even he may possibly find that that which he now believes is dead may be only sleeping. Rural land has always been made of value by the direct individual effort of the
owner or occupier. But the problem of urban land is quite different, and where its value is due to the action of the community, and not of the individuals owning or occupying it, there ought to be some way found by which the community may reap the benefit of the value it has itself created. At the same time, it would be childish because of that one point in the Budget to refuse cordial support to it in its main outlines. I note in regard to the important matter of road development that four and a half millions is to be found in one year and eight and a half millions is to be raised in the following year. I hope the Government will not think that that sum is a penny more than will be needed for the reconstruction of the roads of this country. I should not be surprised if they found in practice that even more was required for putting the roads back into a condition fit for the normal carrying on of trade and industry.
With regard to the Income Tax proposals, there is one matter of detail which appears to me to arise on a close examination of the maps and plans in connection with the White Paper, and that is this. The Super-tax is to begin with the income at £2,000; yet if the principle is to be maintained that 6s. in the £ is the normal charge for Income Tax, how are you to distinguish so that the Super-tax should follow that adjustment, and at the same time smooth out the abrupt transitions in the incidence of Income Tax? Should they not be so arranged that anyone whose income is under £2,000, and who is not called upon to pay Super-tax, should not pay more in future than he is called upon to pay to-day? Of course it may be necessary to raise the Income Tax, and in that case he would have to pay more. That is only a matter of adjustment, but I do suggest to the Government that the effect of it ought to be that no one under the Super-tax limit should have more to pay in Income Tax under this Budget than he is now paying, bearing in mind also that in the case of married people there are legitimate and definite deductions to which they are properly entitled. It does not seem to me that much is required to carry out that principle, but unless it is carried out it really will be a hardship on persons whose incomes are very moderate and not more than equal to the very great demands made upon them to-day by reason of the high prices obtaining everywhere.
I come next to the suggestion of a capital levy. Those of us who support this Budget realise that unless something is done there may be a greater danger than a continuance of the increase of taxation. Behind the speech of my right hon. Friend the Member for Miles Platting (Mr. Clynes) there was a feeling which we all know exists very widely that money made through the War and because of the War is not being returned in sufficient quantities to the Exchequer to meet the necessities caused by the War. The real argument against a capital levy, to which the right hon. Gentleman and his party are so much attached, is that if you had a general capital levy you would infallibly be putting a very great burden on a large number of persons whose resources had been diminished by the War as well as upon a large number of persons whose resources have been increased by it. Never is there such a time as that immediately after a war for developing inequalities of fortune, or when an un-discriminating tax like a capital levy would only emphasise those inequalities and make for greater injustice. The great problem in the minds of some of us is how the money obtained in the War can be returned in large proportions to the country by the occasion of whose misfortunes that money has been accumulated. I support the increased taxation of War profits, though I still hope that the Committee which is considering the matter will devise some more equitable and more businesslike method of dealing with this problem of War finance. Many of us will probably examine with great care, and look forward with great interest to the operation of, the so-called Corporations Tax, which, as has been pointed out, is more akin to an Income Tax, and may go a long way to deal with the position which has arisen because of the War.
While, on these grounds, I support the Budget, I desire to say what I think every speaker in this Debate has said, namely, that, however wise and adequate the taxation may be to the needs of the moment, we can never get rid of the overwhelming necessity for greater economy in expenditure. The very severity of the taxes, and the inevitable opening they give for legitimate criticism, may bring about a
stronger, more acute, and more widespread realisation of the need for economy everywhere, and most or all in Government services. Just as the last year has seen the demobilisation of soldier and sailor, this year ought to see the demobilisation of the bureaucracy. If it does, then the Estimates of my right hon. Friend will be proved false in the most satisfactory manner—not by reason of the yield of taxes, old and new, but by reason of the reduced expenditure which they are needed to meet. If, at the end of this year, the Government can have made reductions in expenditure greater than those adumbrated by the Chancellor of the Exchequer, and if they can really apply themselves to this pressing duty with the same vigour with which they carried on the War, that will do more even than the proceeds of taxation to steady and strengthen the credit of the country and bring us back to normal times. Most hon. Members will remember the story of the Chancellor of the Exchequer who so admirably financed the great wars of Marlborough, that, when a regiment of the Guards asked for a new silver trumpet, he asked in his Minute: "What has become of the old one?" That is the spirit which we want to-day— the spirit that there is nothing too small in which to economise, and nothing too great to which to apply the principles and practice of economy. I would ask my right hon. Friend to show the same courage towards the problem of Treasury control which he has shown towards the problem of taxation. Treasury control is bound to get more and more lax the longer a war lasts, but it becomes a more and more imperative necessity from the moment the war is at an end.

The MINISTER of TRANSPORT (Sir E. Geddes): I should like to intervene at this stage in the Debate, in order to deal briefly with the proposals for motor-car taxation, and to answer some, at any rate, of the questions which have been put to me. The Report upon which the proposals are based is an extraordinary result of the deliberations of the Committee. The motoring community, together with those who are charged in the Ministry of Transport with the maintenance and development of our roads, and the Highway Authorities, have agreed that bad roads are the worst things for the motoring industry; and there is no differ-
ence of opinion that the improvement of the roads should be paid for by those who use the roads. We all hope, as the hon. Baronet the Member for Twickenham (Sir W. Joynson-Hicks) has said, that, when the burden of debt is gone and finance is easier, the Exchequer may be able to take this burden, which a particular community is now so largely ready to assume. The only difference of opinion arises when we consider how the tax is to be levied. Petrol is a measure of the user of the roads by certain mechanically propelled vehicles, but it is a bad measure. It is good so far as the actual vehicle using the petrol is concerned, but an enormous and increasing number of vehicles use, not petrol, but coal, oil, or benzol, and the whole brains of the industry which deals in these fuels are concentrated on trying—quite justifiably and quite honourably—to get a fuel which evades the tax. It is almost as if one were to put a tax on bread, and then exempt all bread which was purely wheaten bread, only taxing bread on which jam was spread. It would be impossible to collect. The Committee, which considered the question very carefully, came to the same conclusion as those who advised the Chancellor of the Exchequer when he made his Budget speech last year. My hon. Friend the Member for Twickenham quoted the Report of another Committee, which, however, was a profiteering Committee, and it was no part of its business to deal with taxation. The remark referred to went, if I may say so, outside the terms of its reference altogether, and it was put into the report, I believe, without taking any evidence at all. That Profiteering Committee had nothing like the experience of those who constituted the Committee by which this matter has now been considered, and I do not think it could carry anything like the same weight. The unanimous opinion of those who have dealt with this matter from the revenue-producing point of view is that the tax is unsound, because it is so easily evaded; so many exceptions have to be made, and it is very expensive to collect. Having reached the stage of being agreed on that point, we have no alternative but to adopt one simple, single tax on mechanically propelled vehicles; and if we come to the point that petrol is not a sound basis for a tax for road-users, we have the abso-
lutely unanimous resolution of every main representative body of mechanical transport users in the country, at a meeting held at the Automobile Club, that, if the petrol tax went, the tax proposed was reasonable, and the relative ratio of taxation for the various classes was sound. Upon that basis I think we are justified in putting forward this tax.

Sir W. JOYNSON-HICKS: I was not present at that meeting, but, if I remember rightly, the £1 per horse-power was not agreed to.

Sir E. GEDDES: I will read the Resolution from the Minutes of this thoroughly representative meeting. The proposals of the Committee are set out in paraphrased form as they were known and reported to this meeting of representatives of the industry, and the Resolution is as follows:
This meeting considers the present system of taxation much fairer than the proposed system of a single tax"—
the present system being the Petrol Tax—
but, assuming that a single tax is to be imposed, agrees the proposed ratio as between the different classes of vehicles. This meeting urges that, if it can be established that the proceeds of the tax will exceed the sum required, there should be a proportionate reduction all round on the basis of 15s. per horse power on private motor vehicles.

Sir W. JOYNSON-HICKS: Do you accept that?

Sir E. GEDDES: No, because, if you do, you have to make it right through. This was in the nature of a bargain, and, if you are going to reduce by 25 per cent. the tax on private vehicles, it would have to go through the whole scale, and we should lose the revenue. Having got to that stage, and agreed that £7,000,000 or £8,000,000 a year is necessary if we are going to carry out this great measure of road development—the classification and reconstruction of our roads and bringing them up to date—and having the broad-minded admission of the community using the roads that they should pay for them, we have gone much further than most of us would have hoped 12 months ago, and I look forward to great developments.
I was asked, "Were the Committee told that the Petrol Tax must go?" No, certainly not; they arrived at their decision after careful consideration. The
other Committee, which said that the Petrol Tax was the best, had no evidence at all on this point. I was also asked, "Will the tax of 7d. on petrol come off the price and remain off?" We have gone as far as we can. There are two great petrol concerns, and we have undertakings from them that the 7d.— which is a 6d. tax plus Id. for cost of collection, leakage and wastage—will come off at once. We shall have to take such measures as are open to us, or such as we may consider necessary in the future, to see that the public are not exploited. Then I was asked, "Why not all vehicles?" The roads are being improved, and the money is being spent, because of the development of mechanical traction of all kinds. We must consider how very considerably the horse haulage in urban districts pays, directly and indirectly, towards the rates, which do a great deal for the roads; and we must agree that we should not wish to put an additional burden on the agricultural community, and to make them pay for the construction of roads which they do not want, and which, as my hon. Friend knows, are not good for their horses. They may say, "Give us some other road at the side upon which our horses can stand up," and that is one of our great problems. I think the rates are quite sufficient for the horse traffic; it is the mechanical traffic which is to be helped by development, and it is on that basis that we have proceeded. I was also asked whether the 25 per cent. rebate on the older cars—before 1913—will be given. My answer is, Yes, it will come in under the Clause which gives the Minister of Transport the power to fix the horsepower rating. The only reason that that has been put into the Draft Resolution is that the Treasury, which used to have the power to fix this rating, has handed the whole thing over to the Ministry of Transport, and will make no claim upon the proceeds of the tax except the £600,000 repayment. There is no intention to change the present R.A.C. rating adopted by the Treasury.

Mr. MILLS: The statement arising out out of the Budget have led to a revelation of two swan songs. One is the final extinction of the hope that the great Empire of Germany was going to pay us such an amount as would have afforded some justification of the promises made at the last General Election. The other
is the fact that, although £4,000,000 was spent in 1909 for the purpose of Land Valuation, which was going to be the foundation stone of the new England, apparently it is the policy of the Government now to drop the taxes upon land, because, forsooth, they have never realised the amount anticipated. That is due entirely to the cowardice of the Government as regards facing the vested interests in land. The beggarly amount of the tax has been one of the features of its failure. It is only because of the Government's lack of the courage to administer the tax in such a way as would have justified the initial outlay that we are in our present position. The party with which I am associated, short of public ownership of land, desires, not only that the Land Valuation Staff shall be kept in existence, but that the valuation of land shall be taken on its present basis, which is 50 per cent. above the pre-war value. From that we hope, even if it be not practicable this year, at least that the pressure of public opinion shall see to it that the people who individually own the land upon which future generations have yet to be born shall realise that they are in possession of something which they cannot hold with equity.
The Chancellor of the Exchequer appears to have touched upon as many points as possible, in order to raise various sums of money, and the subsequent speakers have taken a more or less parochial view—talking about silver trumpets being returned before new ones are bought, while shutting their eyes to what our Foreign policy is imposing upon this country. The people are not looking so much at the roads, although they have painful experience of them—they are not looking as much at what one vested interest or another may be considering to be its hardship under this Budget. They are seriously considering the ever-rising increases in the price of food and every other commodity and the depreciated value of our currency abroad. The common people may not have had the benefits of university education, but they can at least see the ordinary common-sense side of the problem, namely, that if you are going to maintain hugh standing armies in countries like Mesopotamia, bristling with hostile troops, and with no possible hope in our day and generation of getting
any adequate return for the money laid out, you are only leading to higher prices and greater insecurity. We are told now by the Government that Constantinople is to be occupied, and Palestine, of course, is another matter for speculation. It seems to me useless to talk of the mere parochial items of the Budget, while failing to realise how huge are the sums involved in this militarist policy abroad. We feel this very keenly because, whilst it may be surprising to hon. Members, it is a fact that very many thousands of men who fought in the War, and felt they were fighting for the rights of small nations, find now they have come back that, unemployed as they may be, the fact remains that, according to the present method of conducting the Government of the country, their liabilities are likely to be greater and their security even less.
If we approach the other aspects of this Budget—if we come to the proposals of the Chancellor of the Exchequer with regard to the Post Office—he justifies the increase in rates on letters and postcards and telegrams on the ground that the Post Office is not paying. But there are other public services no more useful than the Post Office which have never been run on the principle that they should pay, and if it be a question of making the Post Office pay, the very efficient staff that comprises the Post Office could be given more administrative powers to take over those more remunerative financial propositions which very many hon. Members know the value of continuing in private ways and means. The staff of the Post Office have proved their administrative capacity, and if they be allowed the opportunity of developing the possibilities of administration from that point of view, the paying public would not be asked to bear increased postage rates, but would show some sort of return towards the national expenditure in other directions. This bears very hardly on very many thousands of men every day. One of my constituents came to my house last evening and said, "What are we to do? If you go to a Labour Exchange, you can always find thousands of men looking for a job. What is going to happen with the increased postage rate? How am I to be able to write for the many dozens of jobs which are constantly advertised if I am to be still further penalised by the raising of
the postage rate? If the Chancellor of the Exchequer can see no other way towards the amelioration of the condition of the poorer people of this country, he could at least do this—that where a man can prove that he is unemployed, and that he is writing in search of a situation, some form of free communication might be allowed him by the manager of the Labour Exchange. Very many thousands of men write hundreds of letters before they secure a situation. The state of feeling in the country is bordering on a dangerous proposition for this Government, simply because they feel that hon. Members talk in terms of vested interests instead of in terms of the general welfare. From that point of view, if it is not possible to reduce, or to keep at their present level, the postage rates in the case of bona fide unemployed people writing for situations, they might at least be given the opportunity of writing at the expense of the Ministry of Labour, for I am certain the small expense involved would not make up for the appointment of any one of the ordinary highly-paid men there at present.
The unemployed also are paying a higher proportion towards the cost of government than is desirable or equitable. According to hon. Members, it appears that the proposals of the Government have staggered them. The idea of having to pay for a war that has been fought in their interests seems to be monstrous and absurd, but for very many years the working population of this country, in work or out of work, have borne their proportion to the cost of government which is altogether out of proportion from the point of view of equity. Take a man or woman who has lived his or her life through, who has lived long enough, after being placed on the industrial scrap-heap, to be entitled to a pension, and then, with the first sum of money that they draw out of their old-age pension, you mulct them directly towards the cost of government. Every time they buy a pound of tea, hon. Members know exactly how much the old-age pensioner has to pay towards the cost of government. Every time they buy a pound of sugar, you know how much they have to pay for the cost of government, and it is monstrous to carry on the principle of indirect taxation, which bears so hardly from that point of view. Unemployed people drawing unemployed pay—and there are over 250,000 ex-Ser-
vice men now out of work, the greater proportion of them married—are called upon to pay a direct contribution towards the cost of government with everything they buy for the breakfast table. The principle of indirect taxation is vicious, and sooner or later you will have to adopt a more equitable system of taxation based upon income. The cost of government should be borne according to the ability to pay it, and if we investigate the amount that is paid by the average wage-earner—when we investigate the whole of the ramifications of indirect taxation— the claims put forward by my right hon. Friend (Mr. Clynes) and by hon. Members on these Benches through the ensuing Debates will prove that at least we are not asking for the moon, but for revision in the interests of equity.

Mr. MARRIOTT: The House will have listened with very great interest to the speech which has just been delivered, and with some portion of it I believe they will find themselves in complete sympathy. I refer to that portion in which the hon. Member dealt with the question of high prices. There is no Member of the House who does not feel as strongly upon that subject as he does. But one of the factors which enter into that question of prices is precisely that portion of the Budget to which I take most serious exception, the raising of the Excess Profits Tax. I believe that will contribute very seriously to intensifying the problem which the hon. Member deplores. I pass from his speech to that of the Chancellor of the Exchequer, and I desire to add my congratulations to those which he has already received. His speech, whatever we may think of its concrete proposals, was a model of lucid exposition, and it was also a model of moral courage. I believe the proposals in this Budget, whatever we may think of them in detail, will have one admirable effect. They will provide a demonstration to the whole world of our feeling of confidence in the national finances. I regard the proposals of this Budget as most to be commended on the ground of the demonstration which they afford of the financial strength of the country. That will react, as it seems to me, very favourably on the position of British credit throughout the world. From that point of view I unreservedly praise the general proposals' which have been made, but, on the whole, I feel compelled to associate myself rather with
I those who have found in the substance of the Budget ground for disappointment rather than congratulation. I am rather gravely disappointed, in the & first place, with the angle from which the Chancellor of the Exchequer has made his proposals. On that point I am entirely in accord with every word that fell this afternoon from the right hon. Gentleman (Mr. Asquith). I should like to assure him of the measure of admiration with which I listened to his speech. In no respect was I in fuller accord with it than in what he said with regard to the two-sided problem which, in a Budget like this, you have to face, the problem of expenditure on one side and that of revenue on the other. As I listened to the Chancellor of the Exchequer last night it seemed to me that he was approaching the whole of this problem too exclusively from the point of view of ways and means, and that he seemed to have abandoned, I hope only for the moment, the traditional and healthy function of the Treasury as the great watch dog over our spending Departments. He seems to have concentrated his ingenuity upon the means of raising revenue to meet abnormal expenditure. Twelve months ago we heard, and we have heard several times since from the Chancellor of the Exchequer, a great deal about a gradual return to normality in our finances. As the right hon. Member for Paisley said, normality seems to have been abandoned to the Greek Kalends, and we were last night practically bidden, I do not say in set terms, to look forward to an endless vista of financial abnormality.
That brings me to the subject to which the right hon Member for Paisley devoted a great portion of his speech, namely, the question of the reduction of our capital indebtedness. Everyone will agree as to the necessity of dealing drastically with this matter, but there will not be the same measure of agreement as to the pace at which it is wise and prudent to proceed. The business of the Chancellor of the Exchequer, obviously, is to hit the medium, if he can, between over-haste and over-lethargy in this matter. If I am asked whether the Chancellor of the Exchequer was happy in hitting that medium in this Budget, I say that he has shown himself a little over-impatient in regard to the reduction of debt. Heroic remedies may
be magnificent, but they are not, therefore, necessarily sound finance. In regard to debt redemption, there is one principle which is universally recognised, and that is that you must distinguish between the application of realised or even anticipated surplus to the reduction of debt, and the imposition of fresh taxation for that purpose. That principle has been acknowledged by every Chancellor of the Exchequer from the time of Pitt down to the present.
I invite the Committee to look at the position in which we find ourselves. The Chancellor of the Exchequer, if I followed him correctly, finds himself in a position to anticipate on the basis of existing taxation a revenue of £1,341,650,000, or £2,000,000 in excess of the revenue of last year. On the expenditure side of the account, he is looking forward to £1,177,000,000, and without imposing one penny of new taxation, he might, on these figures, have anticipated a surplus of £164,000,000. I should have been glad if he could have seen his way to allocate every farthing of that surplus to the reduction of debt. But the Chancellor of the Exchequer has not been content with that measure of reduction. It would not quite suit the heroic mood in which he found himself yesterday. He is going to get a surplus of £234,000,000 by his new taxation. In regard to that I have a few questions to put. In the first place, I was going to use an Irishism and to say that out of that £234,000,000 no less than £300,000,000 will be derived from the sale of surplus war stock and so on, which he described as miscellaneous receipts. As the right hon. Member for Paisley pointed out, if you are going to strike out of your balance sheet, as he contended and as I contend, should have been done for the purpose of revenue, that portion which is derived from the sale of surplus war stock, you will find yourselves not with a surplus, but with an actual deficit.
The Chancellor of the Exchequer expects to get £234,000,000 of surplus. How is he going to get it? There are a number of minor changes affecting the whole into which I will not go. The hon. Member for Dartford (Mr. Mills) was critical in regard to the changes in postal charges. I am entirely at one with the Chancellor of the Exchequer on that matter. I am wholly opposed to subsidies of any kind. I want to get rid of sub-
sidies, whether they are subsides on bread or subsidies on the Post Office. Therefore, I welcome in my public capacity the suggestion that at any rate the postal account should be squared. Before leaving the question of stamps, I should like to ask the Chancellor of the Exchequer whether he has considered, as I have no doubt he has, the possibility of placing an ad valorem duty on simple contracts, which at present only pay a sixpenny tax. The sixpenny tax is paid at present—I am not quite sure whether there is any change made in yesterday's proposals—on contracts of very considerable magnitude. A very considerable revenue might be obtained by making that an ad valorem tax.
I now come to the real crux of the Budget, namely, the retention and extension of the Excess Profits Duty. A year ago the whole business community of this country was led to anticipate that the Excess Profits Duty would be dropped, and they have entered into contracts and made their business arrangements on the basis of that understanding. I do not know whether that understanding was justified or not, but it certainly prevailed in this House and in the country. Instead of the abolition of that duty, we have an actual increase of 50 per cent. The duty has been raised from 40 per cent. to 60 per cent. We were told yesterday by the Chancellor of the Exchequer that this was not an absolute imposition. He held out the expectation that if the Select Committee, which is sitting upstairs attempting to solve an exceedingly difficult problem, would provide him with the revenue from another source, the extra 20 per cent. on the excess profits could be dropped. This question mainly occupied the speech of the right hon. Member for the Platting Division (Mr. Clynes) the question of a levy on accumulated wealth. There are two questions involved. There is the question of a general levy on capital, and the question which is being immediately considered upstairs of a special levy on war wealth. I do not suppose that there is a single Member of this House who would not be glad if he could to catch, tax and penalise anyone who could properly be described as a war profiteer. Whether you may call that prejudice or sentiment, we must not permit ourselves, as men of business, to indulge in sentiment, however healthy it may be, without regard to the larger national
interests which are involved. The question which a body of business men have to ask themselves is whether we can impose any tax or levy on accumulated capital, whether it be the result of what is called war wealth or general wealth, without detriment to the larger national interests. The Committee will remember that 12 months ago, and on many occasions since then, the Chancellor of the Exchequer absolutely refused to touch the question of a general levy on capital. No Member of the House has expressed himself more strongly than the Chancellor of the Exchequer. His grounds were mainly these, (1) that the levy was not practicable, (2) that it was not fiscally expedient, and (3) that it could not be levied in such a way as to be equitable between individuals. With all these reasons I associate myself fully. To-day we find the Chancellor of the Exchequer, after enunciating those sentiments, and over and over again giving his adhesion to them, pressing upon the Select Committee upstairs the desirability of obtaining a levy on war wealth. I ask the Committee to apply the test which the Chancellor of the Exchequer himself applied to this question, which is being considered upstairs as an alternative to the Excess Profits Tax. First, on the question of practicality. I shall be grateful if the Chancellor of the Exchequer can answer this question: whether, as between a general levy on capital and a levy on war wealth, it would not be infinitely easier to make a general levy upon capital than a levy on war wealth in particular?

Mr. CHAMBERLAIN: Certainly, it is simpler and easier. Injustice is very often easier than justice.

Mr. MARRIOTT: My right hon. Friend has been good enough to give me the answer which I should have expected from any man of sense and reason, that it would be easier. My right hon. Friend introduced the question of equity which I expressly excluded, but he has given the answer that it would be infinitely easier" to make a general levy on capital than to make a levy upon specially accumulated war wealth. But I wonder whether the Chancellor of the Exchequer has considered how far that admission may carry him. He must expect to be told from the Benches opposite that by the admission which he has just made——

Mr. CHAMBERLAIN: It is not a new statement of mine, as my hon. Friend appears to assume. I have stated it often before.

Mr. MARRIOTT: I am afraid that I must make the same admission, but my right hon. Friend must face the possibility, the certainty that he will be told, and told with a great deal of truth, that he has cut from under his own feet one of the main grounds to his opposition to a general capital levy. If a war wealth levy is practicable—I do not say just or equitable— a fortiori is a general levy on capital, because in one case you have only to make one valuation, and in the other case you will have to make at least two. It is difficult enough to make one, but it would be infinitely more difficult to make two, a valuation, at more or less at arbitrarily selected moments, say the 30th June, 1913, and the 30th June, 1919. So much for the question of practicality. As for the question of fiscal expediency, on this point also I would like to hear my right hon. Friend's opinion. My own view is that there is no distinction at all to be drawn between a general levy on capital and a levy on war wealth on the ground of fiscal expediency. Very nearly the whole financial and commercial world is to-day convinced that either levy would deal a staggering blow at the whole fabric of our national credit.
Then as to the equity. I agree with the Chancellor of the Exchequer in the interjection which he was kind enough to make just now, that on the question of equity, which was the point to which he addressed himself, the argument is wholly in favour of the levy on war wealth, with one rather important proviso, that the Committee upstairs or anybody else can devise an equitable scheme. But you have been told by the officials of the Chancellor of the Exchequer that they cannot devise an equitable scheme as between individuals.
An ideal tax" —
—so says the memorandum submitted to the Committee upstairs—
would no doubt seek to discriminate between various classes of increase of wealth. For example, wealth obtained by improper practices, exorbitant charges, or evasion of direct taxation. Second, wealth obtained from favourable situations of particular class of property, etc. Third, increased wealth arising from increased earning power and alteration of prices. Fourth, increased wealth arising from exceptional efforts and
exceptionally valuable services. Fifth, increased wealth"—
—I ask the Committee to note this—
derived from normal savings out of ordinary business profits or other sources of income; and, lastly, increased wealth derived from exceptional savings made by special efforts for the purpose of investment in War Loans, and the like.
The expert advisers of the Chancellor of the Exchequer say that they cannot discriminate between those various sources of increment of wealth which have accrued during the last five or six years. What, then, becomes of the Chancellor of the Exchequer's argument in regard to the equity of the proposal? It follows that if you cannot make a discrimination, which these expert advisers say it is impossible to make, then you are going to bring into the same category of malefactors the man who has made £10,000 or £100,000 by fraud, the man who has made £10,000 or £100,000 by good luck, and the man who has saved his £10,000 or whatever it may be by personal restraint, and in some cases by real personal sacrifice.
The officials of the Inland Revenue Department may not be able to discriminate between these various sources of increment, but the people of this country will insist that, if this levy is made, a distinction shall be made between these sources of increment. I believe that the national conscience will revolt, and rightly revolt, against taking what may be described as war savings, savings which may have been made by the people of this country in response to the demands or appeals of patriotism. Many of those who are Members of this Committee would, I believe, feel personally dishonoured if we had to go to those to whom for the last six years we have appealed to make sacrifices for the purpose of obtaining war savings and tell them that these savings should be confiscated by such a scheme as is being considered upstairs.
Since the speech of the Chancellor of the Exchequer last night I think that members of the Committee upstairs must feel that they are working with a new factor in their consideration. I am not a member of that Committee or I should not say what I am about to say. I think that that Committee can hardly escape the feeling that they are working, or that they will from to-day henceforward, work under the operation of a threat from the Chancellor of the Exchequer, or, if that
term be too strong, let me say a somewhat menacing choice between two objectionable alternatives. "Either," says the Chancellor, "give me the levy on the War fortunes or you shall pay an extra 50 per cent. as Excess Profits Duty." To my mind the levy has one advantage, and one only, namely, that it would really, I presume, reduce debt, and reduce it immediately. It would be not only available for the reduction of debt, but would be applied immediately to it. This surplus of £234,000,000, which the Chancellor of the Exchequer has in view on his balance sheet, will truly be available for the reduction of debt. That is the official word, and it is the correct word, but is it in the least certain that it will be applied in reduction of debt? At any rate it is not so certain as would be the case in reference to the product of a levy on capital that is being considered upstairs.
It has always seemed to me that on this question of excess profits there has been a very large amount of confused economic thinking in this country. I do not doubt that the person called the profiteer may deserve all the hard things that are said of him. But the man who makes profits legitimately and outside the scope of actual or virtual monopoly is one of the greatest public benefactors in this country, and the bigger the profit the bigger, speaking generally, is the benefit which is conferred upon his fellow man. It is far too often assumed that profits are to be regarded either as a deduction from wages, which, in nine cases out of ten, they are not, or as an addition to prices, or as both. I do not deny that in some cases they may be an addition to prices, and in some cases they may be a deduction from wages, but, speaking generally, profits are neither an addition to price nor a deduction from wages, but the remuneration for an exceptional degree of business acumen, the exercise of which is a general benefit to the community at large.
While I have not sought to conceal my dislike to many of the detailed features of this Budget, it seems to me that it was devised with one very laudable object, and so far a very successful object, of demonstrating to the world the resources and the resourcefulness of British finance. The Chancellor of the Exchequer in his opening remarks yesterday explained to the Committee that it was his ambition to lay broad and deep
the foundations of future credit and prosperity. I believe that the Budget will materially assist British credit. From that point of view it will have, I hope, a historic significance, and in that aspect of his Budget I suggest with all respect that the Chancellor of the Exchequer is entitled to receive the cordial congratulations of the Committee, but when I pass from that general aspect to the details of which the Budget is made up, I have far less confidence that it will achieve the purpose which the Chancellor of the Exchequer desires.

8.0 P.M.

Captain COOTE: I think this Budget may be described as phenomenal and unprecedented. It has received its warmest support from those who ought to have attacked it, and has received the faintest of praise from those who ought to have supported it most warmly. I think it is a Budget which gives the lie once for all to the accusation often hurled against this Government of being a Conservative or Tory Government. The right hon. Member for Paisley (Mr. Asquith) recognised this in that he made, as he always does make—at least he has done so in every speech I have heard him make in this House—a very good coalition speech. Why I welcome this Budget in particular is that it seems to me to make the first attempt to set up a new standard in finance and a new standard of relativity in dealing with the financial problems confronting the country. There has been a great tendency in the past, and all parties have suffered from it, to set up the year 1914 both as a standard of reference and a criterion of judgment. That has led people into very many grave mistakes. It lead the Government into the mistake of making in some respects wild and extravagant promises in the 1918 election, and it leads the Labour party to-day into the mistake of pressing for increases of wages and so on which are not justified by the condition of the industries in which the men making those demands are engaged.
What is the result of referring everything to the 1914 standard? It creates a false sense of values. I often wonder when the people of this country will realise that it is not a question of being better off than we were in 1914. It is not even a question of being as well off; it is a question of how little worse off we can be. That is why I think this Budget marks a
great step forward. It does make a definite attempt to get the people down to the task of paying off debt instead of filling their own pockets- There is one proposal in regard to which I cannot agree with the views expressed, and that is the new incidence of the Income Tax, which has been incorporated in the Budget in consequence of the recommendations of the Royal Commission. As the Committee knows, those recommendations have the general effect of raising the exemption limit. I hope the Committee will not think I am a reactionary when I say that that is a totally wrong principle. After all, Income Tax is the only means whereby the citizen of the State shows that he recognises his duty to the State as well as claim rights from her. If I could have my way, I would have no exemption at all except for the pauper. I would ask every man to pay something every year towards the State which supports and cherishes him, and even if it were only a few pence or a shilling I should like him to realise what he is doing when he makes that payment. I shall be told that that would be affecting the working classes unfavourably. I realise that such a proposal would operate unfairly, unless one could take steps to lessen the burden of indirect taxation upon the working classes. I think the Chancellor of the Exchequer recognises the value of direct as opposed to indirect taxation, because he makes a virtue, and a proper virtue, of the fact that such a large proportion of the new taxation will be direct.
I pass to one subject which has excited the attention of most of the speakers, and that is the question of the Excess Profits Duty. I would ask the Committee to believe that I, for one, have no respect for those who have made money out of the War. It is rather futile to draw, as the last speaker drew, distinction between the various ways in which those who are now wealthy, and who before the War were poor, have obtained their wealth. The man who is entitled to consideration is not the man who stayed at home and made money, even if he made it legitimately, but the man who actually risked his life and limb. That is true service. It is not a sacrifice to lend your money to the State. After all, the man who lends his money so is merely making one form of investment instead of another. He may give up a little personal luxury
and a few amusements, or he may inculcate thrift in himself and his neighbours, but it is not a very large sacrifice. The man who made a large sacrifice towards the winning of the War was the man who actually gave up his whole business and threw the whole of his interests into the melting pot in order to show that he really believed in what the country was doing.
A number of hon. Members got up last night and frankly told the Committee what they were going to do in consequence of the Chancellor's announced intention to increase the Excess Profits Duty from 40 per cent. to 60 per cent. They said, "We shall pass this on to the consumer." One hon. and gallant Friend of mine said that as he reduced the price of the goods he made when the Excess Profits Duty was lowered from 80 per cent. to 40 per cent., so he would now feel justified in increasing the price of the goods to the consumer because the Excess Profits Duty was to be raised from 40 per cent. to 60 per cent. I would suggest to my hon. and gallant Friend and others that that is not patriotism. It is not a question of getting profits up to the 1914 standard, after allowances are made for the altered value of money. The man who comes to me and says, "I am only making £1,500 a year; I made £1,000 a year before the War, and therefore I am a patriot, because with the altered value of money my £1,500 is worth only £750," would not convince me of his patriotism. It is a question of everybody giving up something to-day. I would suggest to those who have announced their intention of passing this increased Excess Profits Duty on to the consumer that their proper course is to pay it themselves and keep the price of goods to the consumer on the same level. If they will not agree to that I would ask the representative of the Treasury what means he is going to take to ensure that the people upon whom this tax is intended to be imposed will pay that tax. If he has no means to ensure that end, the tax is futile and valueless.
I am rather surprised that, having got a new principle in this Corporation Tax, the Chancellor of Exchequer did not attempt to raise the whole of the necessary money by means of it and scrap the Excess Profits Duty. That would be a
logical and correct proceeding. It may be urged that there are administrative difficulties in the way. I do not pretend to have sufficient financial knowledge to express an opinion on that. I ask the Committee whether they do not think that the time has come when we should give a welcome to such a Budget as this. It is a bold and courageous Budget, in that for the first time it makes provision for removing, or starting to remove, the great burden of debt, which I believe is fatal to the true and ordered progress of reconstruction in this country. We shall never get proper reconstruction so long as expenditure, however justifiable, is so large. The chief item of that justifiable expenditure is the interest they have to pay on the debt. It appears to me to be rather simple to draw a distinction between the various forms of debt with which this country is faced, because all debts stand in the way of the proper reconstruction and rebuilding up of this country after the War. Therefore I for one believe that in this Budget we have a spirit adopted which will enable the Government to realise the promises which they made to the people and upon the strength of which they were elected in the spirit as well as in the letter.

Mr. SUGDEN: May I as a back bencher offer my respectful congratulations to the Chancellor of the Exchequer on the splendid fashion in which he has dealt with his work and with his duty. I have made it my business during the last few days to carefully consider the national financial proposals of the United States of America, France, Italy and of Spain, four of the greatest money-using Powers in connection with their national needs which we have in the world to-day. It is interesting to note how and in what fashion the methods which the Chancellor has employed to raise the legitimate and proper moneys necessary for the great services of this country compare with those adopted in those nations I have mentioned. It is also interesting to cull from the proposals of other nations those advantageous methods which they have adopted and which the Chancellor has not adopted, as well as to note, and this is a special point of interest and usefulness, some of the preferable methods which the Chancellor of the Exchequer has incorporated in his Budget and which have not been included in the financial proposals of those other countries. These are
strange and parlous times, and we live in such a period as that the equipoise of a substantial balance in regard to our finances may make or mar the splendid sacrifices of the fighting men and women who did so much not only for this country, but for humanity in general. We had the recent example of the Chancellor in consultation with his advisers giving certain definite counsel to the great finance houses of the country and the great joint stock banks with regard to the important question of the exploitation of finance and improper company floatation. We know what delicate issues were there engendered, and we know what far-reaching effects such methods have upon our industry and upon the welfare of the community at large. The Chancellor of the Exchequer was faced on the one hand with the spectre of Bolshevism, which might result from an improper means of obtaining the necessary moneys, and, on the other hand, with the great grim spectre of a capital levy, which those of us who sit on these benches believe would make for the disintegration of this country and the Empire. I think that the Chancellor of the Exchequer is to be congratulated on the way in which he has faced these great problems which confronted him. He has done so with the courage which is unexampled. He has produced a Budget unequalled in size and importance in any country in the world since the days of Charlemagne.
I think it is worthy of consideration as to what are the problems which faced the Chancellor. They are five in number. First of all he must decide which of the most immediate requirements are to be financed and to what extent. Again, he has to consider and decide what sums shall be expended to develop those industries which are either vital for the well-being of the community, or provide the necessary means for the national exchequer coffers. He has also to consider our duty to posterity and by what amount, by what means the National Debt shall be reduced, and in what number of years it shall be eliminated. He has further to impose such taxes as shall not curtail the legitimate comfort and well-being of the frugal and humble worker, nor yet bind or shackle the great industries of the country upon which the whole community depends. I intend to address myself to those five problems. The Chancellor must decide which re-
forms are the most pressing, and to what extent money shall be advanced for them. We have, for instance, the great housing scheme, and pensions, and the Ministry of Health in all its organisations, and railway and transport, and electricity production, and the vital and most important matter of education. Whilst mayhap the Cabinet, and possibly Members of the House, shall have a bearing and guidance upon each of these reforms and how they shall be dealt with, the Chancellor in the end must accept the responsibility in respect of the moneys which he conceives to be possible to raise for the finances of the country, and as to how much shall be spent upon each of these particular objects. I do suggest that he should have a tight hand and power to suggest money remedies in regard to some of these great reforms. For instance, in the matter of housing I have listened so far to no Debate in this House to deal with the differences in prices of municipal loans and those obtaining for national money, and I think that the Chancellor when he is dealing with the matter of granting sums for great housing schemes should make a pronouncement and give a decision, so that there shall be co-ordination and cooperation amongst all the great financial agencies and the great joint stock banks as to the conditions and prices placed upon the money which is to be raised for this special purpose.
Again, I suggest that sufficient pressure has not been put upon the kind of houses that shall be erected. We know that schemes are being pushed forward all over the country, but it is essential that the houses to be built shall be of a type suitable for the more necessitous working people, rather than for those who are able to sustain themselves without economic assistance. In the matter of pensions again I think there should be a logical consideration as to how these pensions should be dealt with, and as to electricity, I suggest that the Chancellor is not utilising to the full the power that he possesses in respect of the money required, and to see that resourceful endeavour as to economy obtains. Then there are the questions of the key industries and of civil aviation which the Chancellor of the Exchequer must provide the means to supply. And again, there is the question of in what way the National Debt shall be dealt
with. There is a type of thought in the country, which is expressed mainly on the Labour Benches, in regard to the debt which has been incurred, possibly to the extent of £8,000,0,00,000, and when we consider the schemes for which the Government have accepted the responsibility for the well-being of the people, which may raise the debt to £10,000,000,000, or even £12,000,000,000—for there is no calculated basis on which to determine exactly what the great and necessary social reforms we have accepted is going to cost—when we consider that much of this National Debt shall be immediately dealt with, I say the Chancellor of the Exchequer is doing a wise and proper thing in considering that this shall be dealt with in a small and yet adequate fashion. I congratulate him upon his wisdom therein. Now I come to the question of the imposition of taxes and how they shall be applied, and I wish to join with those who have questioned the wisdom of the enormous increase in the rate of Excess Profits Duty and to suggest to the Chancellor of the Exchequer that if he is desirous of obtaining the taxable fruits of industry, he will get better results by having a more equitable method of raising the money.
Let hon. Members remember that during the War our industrial and financial resources have been strained to the uttermost, and that great Powers like the United States, France, Norway, Spain, and Japan, have been adjusting and formulating their trade and business schemes in such fashion that they are in the position now almost of dominating many of our markets. When we consider the great cotton, woollen, and engineering industries, we find that they have been drained to a perilous degree. Whilst just now some of the industries I have mentioned may apparently seem lucrative and profitable, we must remember that this is a cycle and that during the years that have passed there have not been the opportunities to prepare for the competition that I have suggested. I want to give figures with respect to the cotton industry. During the last 33 years, up to the year 1916, the profits of the cotton industry of this country have never been on an average more than five and two-fifths per cent., and that on a capital of between £6,000,000 and £7,000,000. Let us remember that in these old days
the woollen industry has suffered equally as much, for we find that prior to the year 1906 there were extremely lean years in this industry. The renewal of old machinery has not been possible, because of the extreme competition which obtained, and even to-day, with 14 or 15 months of excellent trade, it has not been possible to perfect the organisation and the method of manufacture in order to face the competition that obtains. When we come to the great engineering profession and machinery makers we are faced, first of all, with plant which was patriotically adapted for munition making, all upkeep of the same being abandoned in the primary desire to produce shells and munitions of war, and which an exceedingly careful Government has not over-remunerated. Again, the difficulty of obtaining labour. Further, whilst keen competition fronts us from the United States of America, and even in Japan, with a low-priced labour, they with a calculated and well-prepared financial reserves to deal with markets and industry (the like of which our great English firms have not been able to consolidate or prepare). I therefore suggest that, as a matter of good business, if the Chancellor of the Exchequer were to forego some of his proposed increased Excess Profits Duty these industries would, by the impetus, the preparation of reserves, and the opportunities, be successfully able to compete in the markets of the world, and he would recoup himself several times in the 12 months, for what he would lose in the reduction of the 20 per cent. which he intends to put on the tax. If we tax in this fashion by this Excess Profits Duty, it will not just finish in one operation. It is a greatvicious circle, and little by little there leaps up that inequality of opportunity amongst the people that I have suggested at the commencement. Money must be found, we well understand, and I would suggest to the Chancellor that he should carefully diagnose the whole of his spending and administrative Departments, and whilst I make my bow to the Civil Service, I suggest that in these days, when business and industry are of paramount consideration and importance to the country, there should be inaugurated that scientific, business organisation in regard to the Civil Service that finance industry, that the whole gamut of trained effort amongst all the people may apply themselves to
the reduction of the great debt which rests on our shoulders, and that we may face with courage and certainty the great competition which obtains in other lands, and do our duty to those who have done so much for us in those War days that are past.

Sir J. D. REES: This Budget has been described as a "rich man's Budget." To be rich a man must have a business. Land does not make a man rich now. The more land he has, the worse off he is. If he has investments he is not rich. Unless he sells something everybody wants more or less, he is not a rich man. How do the rich people fare under this Budget? The Excess Profits Duty is raised from 40 to 60 per cent. They do not gain over that. The companies in which they have large interests come into the Corporation Tax. They are not gaining over that. Then as regards their income, they pay Super-tax. How do they come off in regard to that? They pay more than they did before. I calculate, roughly, here, even on an income of £10,000 a year, which to-day means £5,000 to spend, a man pays £500 a year or more Super-tax more than he did before the introduction of the Budget. In what respect, then, is this a rich man's Budget? I am, therefore, amazed at such a criticism. Whatever be the criticism to which it may be open, that is the very last to which it is open. The hon. and gallant Member, for the Isle of Ely (Captain Coote) I think, suggested that all money which was wanted could be got by increasing the Corporation Duty. Had he had any experience of business, I think he would have known that to impose a heavy Profits Duty is to weight industry in the most injurious and harmful manner, and it is probable that the Chancellor of the Exchequer showed a very wise discretion, when he has to impose this tax, in imposing a modest and a moderate Profits Duty. At the same time, I confess I do deeply regret that it was necessary to increase the Excess Profits Duty. The fact is that the Excess Profits Duty is only justifiable at all as an exceptional and a war measure, and this outcry against profits wants to be pruned very carefully. I presume profiteering is profiting with a big P, and you must be very careful that in killing profiteering you do not kill profits, without which the country cannot get on.
The criticisms of the hon. Member for Oxford (Mr. Marriott) struck me as being of a very unusual character. I summarised his speech as he was speaking, and he condemned the Budget in detail, but approved of it in gross. I do not know how that can be done, and for my part I am content to accept his approval in globo and to reject his individual criticisms which, in consequence of his general deduction, seem to me to have been rendered worthless by himself. The right hon. Member for Paisley, to whom the House always listens with so much attention and satisfaction, and at whose feet I myself have sat, seemed to me to be over-severe upon the action of the Chancellor of the Exchequer in taking credit for the sales of stores in the year's revenue, and not devoting the whole amount to the reduction of debt. It appears to me that at a time like this there is no place for meticulous red-tape criticism of that kind. Here is the Chancellor of the Exchequer, in the direst straits, in an endeavour to put right a financial world that has gone wrong, and surely all these ordinary canons of credits and counter-credits, and particular headings to which particular sums should be credited, might very well be left over until we come back to those ordinary, commonplace financial times, in which all these refinements—sometimes they are very much over-refinements—were invented. I would urge that the way in which any critics and any Members of this House can help the Chancellor of the Exchequer and assist in bringing back financial affairs to something like a normal basis, would be by resisting all efforts to increase paper wages and by keeping down expenditure, which is not due to the action of the Chancellor of the Exchequer or the Government, but to the action of the social reformers, who every Friday, and on other days mostly, propose vast additions to the normal recurring expenditure of the country. Look at the cost of education. They say you must have education and every other thing. Every subject in which any particular Member is interested must undergo no reduction whatever happens, and so it is that the most powerful sections of the House do nothing but press for increases of expenditure, and then criticise the Government because they have submitted, as indeed they have, a most formidable Budget.
I would like to congratulate the Chancellor of the Exchequer on having abstained from the usual resource of Chancellors of the Exchequer for something like 50 years of simply saying, "More money is wanted; get it out of the Income Tax and Beer and Spirits." The Chancellor of the Exchequer was not altogether superior to that and gets a great deal out of beer and spirits, but I do congratulate him on having left the Income Tax more or less alone, and the Entertainment Tax, and on having abstained from increasing the tax on tea, which, in point of fact, will not stand any more taxation, and, owing to the extra expense of production resulting from the present position of silver and gold exchange, really is sold in this country at the present moment in many cases at prices below the cost of production. I want to thank the Chancellor of the Exchequer, as I am the Chairman of the Unofficial Committee here which represents India, for his recognition of the £9,000,000 which the Indian Government have provided. I think it was very right and proper that their action should be recognised here, and I sincerely hope that I shall never again hear Indian troops described by the Benches opposite as "Black troops," which, in point of fact, they are not. I gather from the Chancellor of the Exchequer—I should be glad if the Financial Secretary would tell me whether it is the case—that there has been no repayment of the Allies for advances made. I think that is so, and I would ask whether any means can be devised whereby those persons who have come forward in a patriotic manner and have put their money into the different Government loans can be safeguarded. I do not know how it is to be done, but it is a regrettable thing that those who have come forward and saved money and denied themselves in order to put their money into Government stocks should see those stocks reduced in value to the extent that people who bought Victory Bonds at 85 now see them down to 75, and have no money available to profit by the improvement in trade. If any hope can be held out of assistance to that deserving class, to which many of us belong, I shall be very grateful to the hon. Gentleman.
I rather regret that in the midst of the vast figures with which the
Chancellor of the Exchequer has had to deal he has scorned small gains. The aggregate of a lot of small taxes comes up to something quite respectable. If the Chancellor of the Exchequer, for instance, could bring himself to tax every house which had a name to itself it would really bring in a great deal of money, as one must know who has walked up and down dreary streets with hundreds of houses, all of them called by a separate name. If he only put a moderate tax upon them, he would obtain a lot of money, and how reasonable a tax it would be! How comforting it must be to name your house after some Ducal or Royal residence. Why not pay a little for the luxury of laying down your head in "Sans Souci" instead of No. 204 or 305 in some common street or road. I merely give that as an instance. There are many such suggestions on which the Chancellor of the Exchequer could make a bit of money if he would give his mind to it. Amongst his millions let him not overlook these unconsidered trifles which he might pick up.
Upon the tea industry, the Chancellor of the Exchequer referred to the unique increase in the sales, and though I am not one of those who, in the jargon of the House, am "interested" in teetotalism, I cannot but rejoice that so useful and so universally popular a stimulant as tea is should continue to increase in popularity and use in this country. But will my right hon. Friend tell me why the increased duty on tea runs from August, whereas the other taxes run from different dates? I do not know that this very much matters, but if he will explain it to me I shall be very grateful. I know a good deal about tea, but nothing about the dates when these taxes are imposed, and I cannot quite understand why some, like tea and dried fruits, mature in August whilst other things come to their fruition in May and December. Then we come to the duty on spirits. I am interested in this. It seems to me that they are overtaxed, that all stimulants of this character are overtaxed, tea, spirits, and all these things are stimulants, and it is perfectly ridiculous to give any particular preference to one more than another, because the abuse of all is harmful and the use of all is beneficial. That whisky should be 2s. a bottle more to the consumer is really rather severe; that a bottle of whisky cannot be got
For less than 12s. I confess seems to me to be hard. It looks as if those who are down on drink are taking, I will not say an unfair, but rather a large advantage of the situation, that they are seeking to
compound for sins they are inclin'd to, by damning those they have no mind to.
The increased taxation of beer is heavy, almost unprecedented, and is not dealt out a hundredfold, but more like a thousandfold; and this penny a pint extra upon the consumer is very hard upon the poor. I say nothing about the rich man's £2 bottle of champagne, but it is hard upon the poor man to have the extra penny on his pint of beer, believing, as I do, that beer is not only a harmless but an exceedingly beneficial, wholesome, and altogether admirable drink. I think these taxes are overdone. Then, with regard to the wines. I think I rightly understand that port wine is not penalised, as com pared with the light wines, and that all are simply doubled. I regard light wines as an exceedingly wholesome, beneficial, and refreshing drink, though I prefer port. But light wines are a most valuable and a useful drink. The French Government throughout the War supplied their soldiers with millions of bottles, and the French people are notoriously—and I speak as a traveller myself—perhaps the most temperate people on the face of the globe. I am rather sorry it has been found necessary to double this tax. I do not think it will bring in a very great amount, nor do I think there will be much brought in from the port. It will make people drink less wine and less port, which 'is one of the finest medicines. I might have said previously that it might drive them to spirits, but the duties on spirits are now so increased that I do not think the other taxation will drive people to spirits. It may drive them to drugs. I have no doubt, however, that the result of this higher level of taxation will be against the moderate drinker.
I have a natural and proper tendency, perhaps, to look at the Indian effect of these taxes, and I congratulate the right hon. Gentleman upon, differentiating in a most satisfactory and reasonable manner between the choice Havana cigars and the Indian cheroots, the taxation upon which, at Is. 4d. in the pound will, nevertheless, I think be quite as much as tobacco of that class can well bear. I come to motor car taxation. I confess I am sorry that this new rate is
to be introduced of £1 for each unit or part of a unit of horse power. I should have thought that we had discarded now the idea that the motor car is a luxury. In point of fact, it is absolutely necessary as a time-saver. A motor car now is not the particular characteristic of a rich man. The professional man, the tradesman, every man, even Members of Parliament, stand in need of one, and I rather regret that it is necessary to make this change. I believe the rate is rather stiffer than need to have been imposed. We come to the Income Tax. I was glad to hear the Chancellor of the Exchequer say that no immediate decision need be arrived at in regard to the taxation of co-operative societies. Doubtless like other Members of this House, I have received a good many representations on both sides in connection with this debatable subject. I am content to take the advice of the right hon. Gentleman and wait for the Bill.
In respect to the collection of Income Tax, will my hon. Friend represent that to the authorities that taxpayers have not only to pay extremely large amounts, but that they are very much worried by the Income Tax collectors, it seems to me in a rather unnecessary manner. In the first place, there is the double payment in the year. No sooner is one payment out of the way, especially if it is a little in arrear, than a new one comes along, and the man whose income is drawn from different sources, as happens to so many people, is worried from all sorts of directions. There never ceases to be a stream of demands. If something could be done to concentrate these demands it would be well. Would it be impossible for these great staffs—for there are a few clerks about in most offices—to do something to concentrate these demands so that a man might be shot at from one source instead of many sources? I daresay there is a difficulty, but difficulties are made to be overcome, and I have heard—and I would not have mentioned it except it came in the way—I have heard many other people complain that, instead of having one annual tooth drawn in the shape of Income Tax, it now means that a man has to be shot at twice in the year from many directions.
There is one other annual complaint I must mention, and that is in regard to the Super-tax. It is no use talking about
the principle of this tax now, but surely if a man pays Super-tax upon what he actually receives, which is presumably the principle of the Super-tax, why does he pay upon the gross? Why, when his accounts are made up and so much shown upon which Super-tax is to be paid, is the Income Tax—a very large amount in proportion—added before Super-tax is calculated. Of course, my right hon. Friend will be able to say that a Super-tax is merely an additional Income Tax, and that this method is practically a matter of course. I submit that that is a good official answer, but it is not a satisfactory one. If a man is paying Super-tax upon what he has received in his pocket in the preceding year, why, then, should he pay upon at least one-third, or even half, of what he has not had in his pocket, but which has been intercepted by the State. To make a man pay Income Tax on what he has not actually received is, as Holy Writ says, a positive superfluity of naughtiness, and it is very much resented by those who have to pay a large proportion of their possessions.
I wish to ask in regard to the double Income Tax within the Empire why we have this cryptic Resolution which was passed last night. I will not read that Resolution, because I do not think anyone would understand it if I read it. I have had considerable familiarity with this particular subject, and I have often brought it before the House. I asked the Chancellor of the Exchequer what it meant, and he said that if I read various papers I should be able to find out, but life is too short, and if my hon. Friend will explain the matter it will save me the trouble of reading all those papers. Will he kindly tell me whether the maximum amount that may be deducted on account of double Income Tax is 3s. in the pound when the rate is 6s., as it now is in this country? I should not infer that from the Resolution, which no doubt means a great deal, but if the amount is 3s., then the result will be that the man who pays Income Tax in India and Great Britain would come off quite well and he would escape the double Income Tax, but the Australian who pays in his own State and the Federation tax and then becomes subject to the British tax might have a double Income Tax of 14s. or 16s. in the pound, although he would
be entitled to an allowance under this Resolution of only 3s. in the pound. If that is so, I submit that this relief is inadequate, and in respect of the double payer in the Colonies it is insufficient The Chancellor of the Exchequer did not remove my doubts on this point last night. He made a long speech and I did not want to worry him. I was very grateful for his speech, but the Financial Secretary to the Treasury, who is sitting at ease on the Treasury Bench, will, I am sure, settle this question for me.
I wish to refer to the rates of Super-tax. My feelings towards taxpayers are of such a comprehensive description that I can sympathise even with the Super-tax payer. How is it that while the rates on every £1,000 over £2,000 are so calculated that between £1,000 and £9,000 above the minimum of £2,000 the rates are put up from 4 per cent. to 5 per cent., and only a smaller increase is prescribed on the thousands between £1,000 and £10,000 above the limit, and only an extra 6d. upon extra thousands up to £30,000? There seems to be something wrong here, and I want to know why if there is a gradation there should be Income Tax in the two classes to which I have referred of 5s. in the £1, which Heaven knows is enough and excessive, and why when you get up to £30,000 there is only an extra 6d. There is something about this system of gradation which I do not understand. I do not share the regrets of hon. Members opposite that the amounts are not larger. The time will come when these taxes will be far more comprehensive, and will hit far more people than they do at the present moment.
I have ventured to deal with these points in detail because they seem to be of considerable importance. I think the Chancellor of the Exchequer has certainly produced a Budget of great courage. I wish to repeat that I regret extremely that the Excess Profits Duty, which must hit industry, and to which alone we can look to put the country on its feet again, has been increased, and I regret also that that tax and the corporations tax should run concurrently. I am not concerned to dwell upon what appears to be the blots in the Budget. I do not think any other Chancellor of the Exchequer has ever produced a Budget without blots. In conclusion, I congratulate the right hon. Gentleman upon his courage and upon having as his
assistant so able and conscientious a person as my hon. Friend, who is sitting on the Front Bench, who I am sure will not overlook the various points I have put to him, but will endeavour to satisfy my curiosity and allay my doubts in regard to them.

9.0 P.M.

Lieut.-Colonel PINKHAM: I rise tonight to address my remarks to that part of the Budget which refers to the direct tax on mechanically propelled motors as against the present system of taxing petrol. Before doing so I should like to associate myself with the Member who referred to those who have been making fortunes out of the War while others have been sacrificing their lives. A great deal of the prevailing dissatisfaction is amongst those who have been out at the front whilst those who have stayed at home have been doing better than ever they did before. Those men who have been on active service five years, which period they have lost in civil life, naturally are dissatisfied when they see the huge fortunes which have been built up by those at home while they have been running great risks in the War. Therefore, I associate myself with the remarks of the hon. Member for the Isle of Ely. But on the question on which I rose I think we are all agreed that the present income from the tax on petrol is not sufficient. We are all agreed that money must be forthcoming if we are to attempt to get our roads and highways back into anything like pre-war conditions. If money is wanted and the present tax is insufficient it would be just as well to see what is the product to-day and what will be the product of the proposed new taxes. I find that the yield from the 6d. Petrol Tax, with the 3d. per gallon rebate, amounts altogether to £4,450,000. The tax proposed under the Budget will bring in £8,525,000, so that you have a difference of over £4,000,000 to be provided if you are going to attempt to get your roads back into the proper order. The Member for Twickenham (Sir W. Joynson-Hicks) said it was the low-class car, the cheap car and the casual user who was going to be hit. If you put something equivalent on the present mode of taxation you will then, instead of having to pay 6d., require to bring your petrol tax up to Is. 2½d., or the rebate to 7d., or flat rate of lid., and in that case undoubtedly the
small car will be hit more hardly under" the increased taxation on petrol than it would under the system proposed by the Chancellor of the Exchequer.
There is another point which must be taken into consideration, and that is that this is only an experiment, and is only to be used as an emergency tax for the time being. A Committee is to be set up with the object of watching how it pans, out, and if, at the end of twelve months,, any reduction can be made, it will be made. But if you continue under the present system, many of those who are using the roads to-day will not be paying any taxation at all, because they are using other kinds of oil, which is not taxed, and therefore, while the roads have to be kept up, they will go scot free. But if this new system is brought into operation everyone will have to pay, and then the roads may be brought back to their pre-war condition. You have to go in for reconstruction, and reconstruction of a more expensive character, than ever before. It was generally understood and practised by main road engineers a few years ago that six inches of concrete, with wood or asphalt, was sufficient for the then traffic. But for the present traffic on our main roads six inches of concrete is not enough. It will have to be twelve inches, and in many cases even then it will have to be reinforced. And, therefore, if we are to get our roads back so that those who have motor cars can drive in comfort, and those who are carrying heavy traffic can go on with it, we shall have to pay heavier taxes. I am certain that the method proposed to be employed under this new Budget will be more equitable in the long run, and we shall soon get our roads back into proper condition. I am speaking with experience of county highways. I know how the expenses have gone up, and I fear it is possible, unless we get greater concessions from the Chancellor of the Exchequer or some other quarter, that the roads will stop as they are for a considerable time, to the detriment of all using them.

Mr. G. LOCKER-LAMPSON: I have listened to' most of the speeches which have been made this evening, and I am a little surprised that no hon. Member has criticised the proposed continuance of the tax on married couples. I must confess it was the greatest disappointment to me to read the Report of the Royal Com-
mission and to find that not only did that Commission support a continuance of the tax on marriage, but that it also made certain proposals which would make the tax heavier that it was before. I am glad to see my hon. Friend the Financial Secretary to the Treasury here this evening, as I propose, perhaps for the last time, to bring to his notice words which he used a year ago with regard to this question. I say it may be my last opportunity, because, in all probability, my hon. Friend will very soon be promoted to a higher office, and I am sure we shall all be very glad when he is so promoted. My hon. Friend, when this question was brought forward a year, ago, used these words:
I agree freely as an individual and as a married man that there is a good deal to be said for the case which has been represented to-night. It has always been an intolerable anomaly to feel that, so far as taxation goes, it would be cheaper to live with a woman who is not your wife than with a woman who is. That is an intolerable anomaly.
If it was an intolerable anomaly a year ago it is so still, and it would still, to my mind, amount to a gross injustice that two people who may be living together, but who are not married, should get off paying a tax upon their joint incomes which they use for their joint purposes, but that directly they marry a heavy tax should be put upon their legal bond. You do not treat anybody else in this way. Two sisters living together enjoying their joint incomes have to pay on their separate property. Two brothers living together, a mother and a daughter, a father and a son, all are in the same position. People who are unmarried may live together and will pay on their separate incomes, but directly the man and woman marry they have to pay a heavy penalty on their legal bond, as they have to pay a heavier tax on their joint incomes. You do not treat the man and wife in this way so far as the Death Duties are concerned. When a wife dies, you do not tax her capital and treat it as the joint capital of her husband and herself. If the husband dies, you do not treat his capital as belonging partly to his wife. You treat the Death Duties on an entirely separate footing, and I cannot see why you should take the particular case of the Income Tax and put this heavy tax on marriage.
I should like to give an illustration just to show what the law will mean, supposing
that the recommendations of the Commissioners are carried out. Take the case of an unmarried man who earns £420 per year. You deduct a tenth because it is earned, and make an abatement of £135, leaving an income on which the tax is levied of £243. On the first £225 he pays 3s., and on the remainder 6s. Therefore, he pays a total tax on his earned income of £39 3s. An unmarried woman earning the same income would pay exactly the same. The total payable by those two unmarried persons would be £78 6s. What happens when they are married? Directly they marry they have a double income of £840, less one-tenth because it is earned, and an abatement of £225. They have to pay on an income of £531. The first £225 is taxed at 3s., and the remainder at 6s., and they therefore pay a total of £125 11s. When they were unmarried they paid a total of £78 6s., so that there is a marriage penalty of no less than £47 5s. This is a great and intolerable anomaly, and I cannot see that it can be defended from any point of view. It did not matter so much 50, 60, or 70 years ago. When Sir Robert Peel re-imposed the Income Tax in 1842, it was only 6d. in the £, and, although the principle was the same, the burden was not nearly so heavy, and it did not very much matter that an extra 6d. in the £ should be paid on the joint revenue when two people married. Again, in those days there was no Married Women's Property Act. Before 1882, a married woman did not own her property when she married. The moment she married her property became the property of her husband. In 1882 the Married Women's Property Act was passed, and on her marriage her property remained her own. I should like to quote a few lines from the Married Women's Property Act:
Every woman who marries after the commencement of this Act shall be entitled to have and to hold as her separate property all the real and personal property which belonged to her at the time of marriage, or which shall be acquired or devolve upon her on marriage.
That is the law of the land to-day, and it makes the property of a woman who marries absolutely her own to deal with as she deems fit. A Clause was put into the Income Tax Act of 1918, which came into force last ear, in direct violation of the Married Women's Property Act. These
are the words that dealt with the question:
The profits of a married woman living with her husband shall be deemed to be the profits of the husband, and shall be assessed and charged in his name and not in her name or in the name of her trustees.
That is a direct violation of the Married Women's Property Act, which, after all, is the great Charter of all the married women of this country. What was the use of legislating and passing the Married Women's Property Act if many years afterwards you produce another Act to reverse the principle on this important question. The Government are not only continuing the violation, but they are actually aggravating it at the present time. Under the present law there is one instance, and one instance only, in which a wife can be assessed separately from her husband and pay the rate on her own income. It is where they both earn their incomes, and where the income is not over £500 per year. The Government are now abolishing that last remnant of the rights under the Married Women's Property Act. Let me give an illustration. I will take the case of a husband who is earning £370 and of a wife who is earning £130, making a total of £500. Under the present arrangement the wife is totally exempt from the tax. The husband has to pay £22 10s. Under the new proposals of the Commissioners, which I understand the Chancellor of the Exchequer is going to accept, the same people earning exactly the same income will pay on £500, less one-tenth because it is earned, and less the abatement. The total amount on which the tax will be payable is £180, and at 3s. it works out at £27. Therefore, under the recommendations of the Commissioners the right hon. Gentleman is not only abolishing this last remnant of the married women's rights, but he is making them pay an additional tax on marriage of £4 10s. Last year the right hon. Gentleman always produced two arguments against abolition of the marriage tax. In the first place, he said it would cost a great deal of money, but that argument leaves me quite cold. I do not care a bit how much money it costs to remove this tax upon marriage; the heavier the cost, the heavier is the present burden upon the marriage tie. You might just as well say that a man, if he ceases to pick other people's pockets, will lose money. This
is an unjust and indefensible tax. It is a great anomaly, and the cost of removing it is the exact burden, to a penny, upon marriage at the present moment. The right hon. Gentleman also told us last year that it would lead to a great deal of evasion if the tax were removed, and husband and wife were allowed to be assessed separately. Death duties can also be evaded, and it has been found possible to arrange that, if within a certain period a man or woman hands over a certain sum to someone else and dies, death duties have to be paid upon it. It could quite easily be arranged in the case of this tax also. I do not care what limit is put upon it. Let there be a limit of ten years, if it is thought fit. It could easily be arranged that, if a husband or wife handed over a part of their income to the other for the purpose of evading the tax, that portion should still be considered part of the income of the person handing it over. I believe that with a little good will all these difficulties could be surmounted.
My last point is this: I do not believe that the Report of the Commissioners was a fair report; that is to say, I do not believe the way in which the evidence was taken, or the way in which the Commission was set up, was fair. There were twenty-six Commissioners from start to finish, and there was only one woman among them. Evidence was given by 186 persons, among whom there were only five women. Among the witnesses there were no less than eleven who gave evidence in regard to the marriage tax, and eight of those were in favour of its abolition. Three only were in favour of it, and all of those three were officials or connected with the Inland Revenue Department. A large majority of the witnesses were against the marriage tax, and yet, in spite of that, the Royal Commission, with only one woman out of a total of twenty-six members, has reported in favour of its continuance. The weight of the evidence is in favour of the abolition of the marriage tax. The Commissioners stated that they considered it to be a grievance more vocal than real, and that they considered it more a grievance than an injustice. Unfortunately these married women are not organised. The co-operative societies are organised, and the Royal Commission has reported against the co-operative societies, that is
to say, they have reported against putting Income Tax on the dividends paid to members of co-operative societies, but in favour of putting Income Tax on that part of their profits which they use for trading purposes. I understood the Chancellor of the Exchequer to say yesterday that he is going behind the Royal Commission, and is going to disregard that suggestion and let the co-operative societies off altogether.

Mr. CHAMBERLAIN: That was not what I said, and I think it is important that I should correct that misapprehension. What I said was, that I should like to reserve my judgment on certain points, and notably on that one, in the recommendations of the Royal Commission, until the subject came up for discussion in legislative form before the House. No doubt hon. Members themselves would desire to reserve their judgment in the same way.

Mr. LOCKER-LAMPSON: Will the right hon. Gentleman reserve his opinion about the marriage tax? In that case the Royal Commission also has reported in a certain direction, and a great many people in the country disagree with them. I am not saying for a moment that cooperative societies' profits ought to be taxed; I am not arguing that one way or the other; but I do not see why he should reserve his opinion in the one case and refuse to reserve it in the other. The feeling in the country on this matter is not vocal, and it is absolutely unorganised, but I believe it is growing, and that, in a few years' time, this marriage tax will be wiped off the Statute Book, and people will be amazed that it was able to live until the Twentieth Century.

Mr. DENNIS HERBERT: If, at the commencement of what I have to say, I join in the compliments which have been paid to the Chancellor of the Exchequer on his Budget, I do so with the greatest respect, and for the purpose of making it perfectly clear that, so far as I am concerned, I sincerely and heartily support this Budget as a whole. I want to make that clear before I enter upon the criticism of one or two points in regard to it. The Chancellor of the Exchequer has set out upon the great task of fighting the giant debt with which this country
is confronted, and I think it is the duty of all of us, if we think we can find any flaws in his equipment, to try and do our best to persuade him to rectify them. I want particularly to address myself, in the first instance, to the question of the Excess Profits Tax, and I would remind the Chancellor of the Exchequer of the words which he used in regard to this tax a year ago. Speaking from memory, I think they were to the effect that the tax was a bad tax, that it was put on hurriedly and in a clumsy form, to meet an emergency in war time, and that it was desirable to get rid of it as soon as possible. He has given a reason for his change, and that, no doubt, is one which has a great deal of truth and a certain amount of force in it, namely, that when he spoke of this last year he anticipated a bad time for industry and profits in this country. On the contrary, he has found that profits have been going up by leaps and bounds. But that does not alter the fundamental objections which there are to this tax. This time last year, when it was 80 per cent., it was in practice taking away the whole of the excess profits reaped by those big industries, and, therefore, it was open to all the objections which have been referred to of causing extravagant and wasteful expenditure on the part of those who were subject to the tax. That harm was, to a great extent, removed by reducing it to 40 per cent., but when you come to increasing it to 60 per cent. those troubles and objections are again brought into existence. I would suggest to the right, hon. Gentleman that rather than increase the Duty from 40 to 60 per cent., if he cannot see his way to do away with it altogether, he should continue it at the lower rate for another year.
What is the real harm in connection with the Excess Profits Duty? In a very large number of cases the excess profits have been put back into industry as working capital, and I would ask the right hon. Gentleman to consult some of those many Members of the Government who have at one time or another been concerned with the Ministry of Munitions. I will put to him a case within my own personal knowledge of a firm which before the War consisted of two partners who made approximately £2,500 a year between them. When the War came along they were asked to extend their business. By the time the Armistice came,
they had been making for two or three years £20,000 a year. They owed the Government something like £30,000 for excess profits. They owed the Ministry of Munitions something like another £30,000 for money borrowed, and when their contracts were broken they had no cash in the till with which to carry on. and they had no work to carry on at, and the Government were advised that if they took any steps to enforce payment of the Excess Profits Duty, apart entirely from what was owing to the Ministry of Munitions as a loan, the Excess Profits Duty would not be recoverable. Incidentally the industry would have been broken up. I do not know exactly what happened with regard to the Excess Profits Duty except that, apparently, the Authorities were bound to turn a blind eye to the state of affairs. At any rate, the Ministry of Munitions came to the conclusion that the only way of saving the Government's money was to nurse that firm for a considerable time until it got round again to a period of prosperity. That is typical of many cases, and that shows where the harm comes of taxing these excess profits' at a time when you are doing your best to encourage industry, to get more money put back into industry and to increase the working capital of the country. The excuse at the time the War was on was that the people who were making the big profits were making them out of the manufacture of ammunition and helping those who were fighting against our enemies, but whom are you hitting by this Excess Profits Duty at present? You are hitting the men who have been fighting for their country, who have come back after five years to try again to start in business, to save money and to make something to put back into the development of the business which they look to to provide them with a living for the rest of their lives. Every virtue, if ever there was any, attaching to the Excess Profits Duty ceased to exist the moment fighting ceased. It violates that cardinal principle which we must try to follow in all taxation, not to reduce the production and the industry which is going to provide the funds that are going to pay the tax. I believe that the Duty receives very little support, except from hon. Members on the opposite Benches. It is time there was a little plain speaking with regard to what I consider to be the errors of the views of
some of the Labour party on the subject of taxation.

Mr. GRIFFITHS: We produce goods and not views. We are in it every day and understand it.

Mr. HERBERT: That is exactly what I was going to point out; that those whom the hon. Member claims to represent are, and always must be, the people who pay these taxes, no matter upon whom you may levy them. If you levy a tax upon industry, who pays it in the end? Those who are. the consumers—the most numerous class in this country, and therefore those who are the greatest consumers, the poorer classes, who have to spend their money upon the necessaries of life. Therefore, it is time that hon. Members recognised that they are not harming the rich, so much as those whom they profess to represent when they attempt to impose swingeing taxes upon those who are better off than they think they ought to be. The wealthier classes, as a rule—there may be exceptions—have borne their part cheerfully in supplying the funds which have been necessary for the defence of their country. Unpleasant a person as the war profiteer may be, if those who represent the working classes want to help them, let them see that they do not hinder themselves in doing that by an attempt to do harm to those whom they dislike. The war profiteer, generally speaking, is a man who makes good use of his money, and if he puts the greater part of it back into industry, he is doing much to help employment. He is doing: much to give an opportunity of paying good wages, and if you are going to ruin him and the industry which he does so much to control and support, you are going, in the end, to throw the burden again upon the poorer classes.
I seriously appeal to the Chancellor of the Exchequer to try to modify in some way or other his proposals with regard to the Excess Profits Duty. I am not without hope that, before this Debate comes to an end, we may hear that the great opposition which has been offered to this proposal by all the greatest authorities in industry and manufacture will have had some weight, and that he may alter them considerably, but I would at least ask that if he cannot see his way to get rid of the duty he will at least keep it down to 40 per cent., even though it may entail keeping it on for another year.
The harm of the tax in the past has very largely been in its magnitude, but the harm of the 40 per cent. is trifling compared with the 80 per cent. If he cannot even do that, and if he maintains it at 60 per cent., I would ask him to consider whether it is not possible to arrange some machinery by which exceptionally hard cases may be given some consideration, because I am certain his colleagues in the Government can tell him of very many cases where the tax is already long overdue and where any attempt to recover it will only lead to the breaking up of businesses which ought to be a great asset to this country in the future.
In regard to the taxes on alcohol and the liquor traffic generally, I welcome the higher taxes on such things as champagne on the ground of the new class of champagne drinker who has arisen since the War. The War has obliged me to give up a good deal of the luxuries of that kind, which I occasionally indulged in in the past, and for some time lately I have been driven, in the small amount of alcohol I have consumed, to make the greater part of it, at any rate, beer, and that is a position to which a very great many others will now be driven by the Budget.

Mr. CHAMBERLAIN: Lucky man!

Mr. HERBERT: That observation no doubt has some reference to one's internal economy. I would suggest that some consideration might be shown to beer drinkers. If you come to the question of temperance reform, you find that reasonable and moderate advocates of temperance reform have never objected to the higher taxation of spirits and to leaving beer more free. You will not get the ordinary Britisher to give up his drink, and if you allow him cheap and pure beer he will do himself very little harm. In the old days when there was constantly increasing taxation on beer the brewer managed, no doubt, to a certain extent, to dodge it, and to pay it himself, without really throwing it upon the consumer; but the poorer classes in this country do now feel very strongly the burden of the extra taxes on beer, and I suggest that what is proposed to be obtained from that source would be better obtained by even higher taxes on some of the luxuries of living, and leave healthy drink comparatively free and cheap. As strongly as I feel on the question of Excess Profits
Duty, I do most heartily congratulate the House and country on the great effort which the Chancellor of Exchequer has put before them, and I hope we shall feel that, although this heavy taxation to which we have to submit, must inevitably have the result of a tendency to keep up high prices, that that at any rate should also have the tendency, which is very advisable in these days, to make people try their best to spend as little as they can and to economise as much as possible.

Brigadier-General CROFT: I join with other hon. Members in congratulating the Chancellor of the Exchequer on his speech in introducing the Budget. Whatever one may think of the way in which the incidence of taxation falls on different parts of the community, there is not a soul in this Committee who will not welcome the fact that this Budget is absolutely divorced from the old method of appealing to one section of the community and strengthening one party as against the other. Everyone will realise that it is a most courageous effort to grapple with a colossal problem, and, as it was the right hon. Gentleman's late distinguished father who persuaded me to enter politics, I can say with very real feeling that nothing has given me greater pleasure in my political life than to see the really courageous effort that he has made on this occasion. If I criticise one or two of his proposals, I hope he will understand that I am not complaining of the amount which is imposed upon wealth, or the amount which is imposed upon industry, or on other sections of the community. I am only speaking because I feel that possibly in one or two directions the wrong methods have been applied. I thank the Chancellor of the Exchequer for one or two proposals in the Budget. First of all, for the attempt to meet the gross injustice of double Income Tax. He knows that I have dealt with this question with great heat in the past, because I thought it was an enormity that the people of the British Empire should contribute twice over towards the maintenance and freedom of the British Empire during the War, and should have to pay such terrible taxation. Everyone who is interested in the cause of Imperial unity will rejoice that the Chancellor of the Exchequer has gone a very long way towards meeting that anomaly.
For the sake of building operations in this country, I heartily congratulate the
right hon. Gentleman and the Government on having got rid once and for all, I hope and believe, of the Land Taxes which were introduced in what was known as the "People's Budget." I should like to remind one or two hon. Members that at the tie of that Budget everything was foretold which has since happened. When the Budget was introduced I gave it as my opinion that, as it was called the People's Budget, all the people would suffer from it. That prophecy has proved very true. I said that the amount of land you would get out of the Land Taxes would not fill any flower-pot on any window-sill, and that no single soul would be the gainer in this country except the officials engaged in land valuation. That description was not a bad one, considering that it is always very dangerous to prophesy about political events. I was amazed to hear the right hon. gentleman say—I do not know whether he was sounding the Prime Minister's feelings on this question —that the machinery was still to be kept going, with all its colossal expense on the taxpayers. Do we or do we not mean business in regard to the reduction of superfluous staffs? The Chancellor of the Exchequer asked us to help him to cut down expenditure. How can he justify— whatever the effect may be in softening the fall to the promoters of this measure, of which the funeral orations have been uttered this afternoon—the maintenance of that land valuation staff for the paltry reasons which were given to-day? I hope he will set to work at once with his colleagues, and insist that, as far as the land valuers are concerned, the host of officials who were enrolled in the army of bureaucracy at that time will be sacked. With regard to the increased Beer Duty, the Chancellor of the Exchequer stated that his information was that the cost of materials was going to come down and that barley had already come down in price. So far as barley is concerned, the seasonable purchases of barley always practically cease at the end of December, and the consequence is that it really is not a very good argument for him to say that he believes the price is coming down.

Mr. CHAMBERLAIN: The hon. Member misapprehends my argument. There is another factor of greater importance and that is that America has gone dry. This is likely to reduce the price of barley.

10.0 P.M.

Brigadier-General CROFT: As regards American barley I do not know, but I should be glad to hear that that is so. The effect has not been very great up to the present time. The right hon. Gentleman must remember the difficulties of freightage in shipping are still great and are likely to keep barley at a high price for some years to come. I would ask him to remember also that Russia is out of the market and other great markets in the world have not yet recovered, in the near East and other countries. I hope what the right hon. Gentleman says is correct, but I do not think he can be justified in counting on any great reduction in the cost of materials, and I hope he has not based his proposals on that point of view. It is always popular to increase duties on the one section of the community who are sufficiently iniquitous to drink beer, but there is a limit to this. In view of the fact that beer is regarded as a staple drink and food by a very great number of workers in this country, is the right hon. Gentleman wise in increasing; the price at a time when we want people to be happy and contented? Are there not other measures which he could propose in order to raise his revenue? I could never understand why we have neglected the advertisement tax which, might bring in an enormous revenue. A great deal of advertisement is superfluous. The right hon. Gentleman himself has brought about an enormous amount of advertisement through the Excess Profits Tax. A great many firms have spent about six times as much on advertisement simply in order to evade the Excess Profits Duty, and I would suggest that the time has come to consider that very fruitful source of revenue on what makes the country hideous and makes our newspapers unreadable.
Turning a moment to the dismal failure of the Post Office Returns, the whole country will be alarmed to see in this great service a wonderful example of nationalisation which has become a great burden on the country. I cannot help thinking that if the Postmaster-General, at the instance of the Chancellor of the Exchequer, were to get advice of private business men on the whole question of running the postal and telephone services of the country, it would be well. It is not encouraging to us to see the position in the Post Office at a time when we have the threat held forth that industries
should be nationalised which would kill revenue and initiative and produce fatal loss.
The Excess Profits Duty has been dealt with admirably by the hon. Member for Watford (Mr. D. Herbert). The Chancellor of the Exchequer knows as well as anybody, a fact which is sometimes not remembered by orators at street corners, that all your revenue comes from productive industries, if not directly, ultimately. Even those people who are wicked enough to succeed their fathers or grandfathers would not be clothed, housed or fed but for the fact that somewhere back in the family there was some body who had energy to produce and save money, and I am extremely nervous that the incidence of the Excess Profits Duty is going to defeat the end which the Chancellor of the Exchequer has in view —because nobody is more desirous than he of seeing the productive energy of this country producing—if this method of charging industries through Excess Profits Duty is continued. The one thing we want to do is to get every man who has capital, and all labour which is available, to work, and with the whole markets of the world at our feet it is almost inconceivable that any article made in this country which is good could not be sold at a profit in some part of the world. That being so, is it wise again to increase the Excess Profits Duty? Will not the immediate result be to slow up the process of expansion, and prevent business men undertaking new ventures, and is there not the real danger that if the Excess Profits Duty, which we were led last year to think was going to be stopped, remains these men will take their business to other countries.
I may give an instance of a certain industry with which I am familiar, although I am in no way taking part in its direction. It is a new industry in this country. It started to develop a branch in the United States. It was soon discovered that a factory could be built in six weeks in the United States to produce an article which was a British article, and at a cheaper cost than it is produced at in this country, and this remarkable building feat was made possible by a system of payment by results in the building industry. Is there not a real danger that the directors of this new industry should say that, in the
interests of our shareholders and common sense, it would be wiser to produce that article in the United States or some other country where taxation is even less? Business men do not move their capital unless there is a very real reason, but once taxes pass a limit which is considered reasonable and just, business is removed. It is not unpatriotic, but both capital and labour migrate to where they can get the best return. That is the real danger if the right hon. Gentleman continues his Excess Profits Duty.
That duty is particularly vicious in this. A man making £1,000 over a prewar profit is taxed 60 per cent. If he makes £1,000,000 more than his pre-war profits he is taxed 60 per cent. The result is that you are simply driving all prices up, and then you are going to have a natural demand from the Labour Benches for increased wages all round. Would it not be wise once more to restore competition by having a graduated Excess Profits Duty so that very large profits should pay a larger amount, and other industries which only make a smaller amount should pay a less rate? The right hon. Member for Paisley referred to the Civil Service as costing this country £500,000,000. I notice with exceeding frequency that the Chancellor of the Exchequer lectures the House of Commons for not being more careful in its expenditure, and the House of Commons lectures the Chancellor of the Exchequer for allowing the House of Commons to be so extravagant. But it ought to be joint responsibility. There is no good in accusing the Chancellor of the Exchequer of not doing his share when hon. Members parade opposite his house with lists of those who are prepared to demand for this and that increased expenditure, and even have the insolence to come up to independent persons like myself and say, Unless you sign this document your constituents will be told that you have failed to come up to the scratch." Great though the task is that the Chancellor of the Exchequer is undertaking, and great though the future of the country will be if he can fulfil the hopes of his Budget speech, it is easy for this House absolutely to destroy the effect of that if we are going to give way to demands which in the long run are not going to benefit the individuals concerned, but are simply going to increase the turn of the vicious circle of wages and prices.
The proposal was made with great reason and moderation by the right hon. Member for Platting (Mr. Clynes) that we should have a levy on capital. I for one can only rejoice that the Chancellor of the Exchequer has not been led astray by this extraordinary fallacy, that by depriving industry of the funds which make industry possible, namely, its liquid capital, you are going to benefit the prosperity of this country much less to decrease prices. When the right hon. Gentleman solemnly advances that as the alternative of the Labour party, I ask him does he really believe that industry is going to increase in this country by taking one-fourth or one-half from the capital of industry? Where does he stop? Does he take one-fourth or one-half of the banks in this country? How does he exclude the banks?
When one realises what British credit means at the present time, I say that if it was even believed in business circles that there was any chance of a capital levy being adopted, it would be found that the whole credit of the country would collapse, and that every man who had any opportunity of developing business would take his capital elsewhere, and would flee from the proposed levy as from the plague. Hon. Members who sit on the Labour Benches were equally responsible, with the rest of the House, in going to the people and asking them to see the War through, and to invest their money in the various War Loans. They gave their pledge that the War Loans would ultimately be redeemed at par. Now, when 17,000,000 of their fellow-countrymen have responded to the appeal made to their generous instincts, it is deliberately suggested by certain Members that one-quarter or one-half of that invested capital should be seized by the State. What we want is confidence. The Chancellor of the Exchequer has done a brave thing. He has risked unpopularity with everyone, except the drinkers of mineral waters, and I yet hope that he will cast his vision a little wider in that direction. I hope that Members of the Labour party, before they go further in pushing a policy for which there is no enthusiasm in the country, and which can end only in disaster, will consider other means of raising the necessary revenue.

Major O'NEILL: I think the Debate has been remarkable so far for two attributes. The one is that so little comparatively has been said about the Capital Levy, and the other is that so much has been said about the Excess Profits Duty. I think the reason why the Capital Levy has been mentioned so little is that, whereas last year it formed a large part of the Debate on the Budget, many of the forecasts of supporters of a levy have not been fulfilled, and do not look like being fulfilled. The Committee will remember that the main advocate of the Capital Levy was the hon. Member for Penistone (Mr. Arnold) who, unfortunately, has not been in his place for a long time. He made a very able speech last year. The main ground upon which he based it was the fact that without such a levy the whole of the finances of this country would be in a state of chaos. He said we should see this year that Income Tax would have to be raised to a general rate of 10s. in the £, and it would be a question merely of going to a capitalist and saying to him, "Look here! It is the same to you whether you pay 10s. Income Tax or whether you have a certain percentage of capital taken." Those forecasts have not been realised. Here we are with the finances of the country in an extraordinarily sound condition. Any question of a general Capital Levy has happily disappeared out of the realm of practical politics. That is due to the extraordinary recovery of our finances during last year.
The other remarkable attribute of this Debate is that so much has been said about Excess Profits Duty. I am sure the Chancellor of the Exchequer considered this matter very carefully. When we think how much this has formed the subject of speeches we must realise that it is one of the points to which he gave most attention when he was considering the kind of new taxation which would have to be proposed this year. He knows as well as all of us the great disadvantages of the Excess Profits Duty. It has been in the past a good revenue producer. No doubt the right hon. Gentleman has had to consider whether it would be desirable or not to raise that duty. We know it leads to carelessness in finance and to extravagance. The hon. and gallant Member who spoke last stated that it has led to a large amount of unnecessary advertising. No one will
go out to make profits beyond the free limit. I am sure the right hon. Gentleman has considered the question very closely, but might it not have been possible to have an enlargement of the new Corporations Tax, and in place of raising the Excess Profits Duty, or even with its abolition, to have brought in a general tax on all profits, not only on the profits of limited companies, but upon the profits of every individual in the country; upon every partnership and every professional man? We would leave the Income Tax as it is, but this other tax, I believe, forms part of what a right hon. Gentleman called the financial armoury of various countries. It is a small prior charge upon profits such as the right hon. Gentleman proposes in his Budget for limited liability companies, but extended to partnerships, professional men, individuals, shopkeepers, and so on.

Mr. CHAMBERLAIN: As I stated before, a tax such as is suggested by the hon. and gallant Member would be equivalent to an additional Income Tax.

Major O'NEILL: I do not think it would become an additional Income Tax, and, if properly administered, it would probably catch a number of people who in one way or another manage at the present time to evade the Income Tax. The mere fact that the right hon. Gentleman has gone in for this Corporation Tax seems to me to show that he has to a certain extent differentiated it from Income Tax. Although I see grave objections to the increase in the Excess Profits Duty, for reasons which have been given, at the same time if it is impossible to adopt some form of general tax on profits as I have suggested, I have no doubt the increase was necessary. With regard to the other items of taxation, there is no point to which I take particular objection apart from the Excess Profits Duty. Arising out of the taxation of spirits, and speaking as an Irish Member, I would like to ask the Chancellor whether he has considered what can be done in Ireland to cope with what is undoubtedly a very great and growing evasion of the Spirit Duty by the prevalence of illicit distilling on a large scale throughout Ireland? At present, with the condition of Ireland such as it is, it must be difficult for those who have to administer the law to do so in any form, but I do suggest that unless
in some way the enormous amount of illicit distilling, especially since the spirit duties were increased,. is overcome, the increased revenue which should be derived from this source will be largely unavailable. I hope the Excise authorities will look into that.
I should like to say a word or two upon what I regard as the most important feature of this Budget, and that is the drastic way in which it deals with our vast National Debt. It is much to be welcomed that proposals for paying off the Debt are so drastic as they are. The redemption of our National Debt is the foundation of the whole cessation of the inflation which at present exists in this country in almost every direction, cessation of borrowing and then repayment of debt. It was the foundation of the Report of the Currency Committee, appointed not long ago, that never could we commence to reduce our inflated currency until such time as we began seriously to tackle the problem of our enormous National Debt. As the right hon. Gentleman the Member for Paisley said, the only unfortunate aspect of the reduction of debt in this Budget is the fact that so little of it can be allocated to the reduction of the floating debt. Even after the end of this year the floating debt will still apparently stand at least £1,200,000,000, if it has not been increased in the course of the year. That means that the Government will be a constant competitor in the money market with regard to Treasury bills. So long as that state of affairs lasts, so long as our floating debt remains at this enormous height, so long as the right hon. Gentleman has to go into the City and has to place his Treasury bills at even 6 ½ per cent., so long will any general lowering of the rates of interest on money be impossible; and as long as that is so, all gilt-edged stocks and Government securities cannot but continue the downward trend which has been their attribute for such a very long time. The right hon. Gentleman told us that Ways and Means advances had been completely wiped out by the 31st March last, and then he said that during the first fortnight in April he raised the rate of Treasury bills from 5½ to 6½ per cent., but he did not tell us why it was that during that first fortnight of this month he was unable to place his Treasury bills at 5½ per cent. in the City, the old rate. I have heard it said in the
City that the raising of the rate to 6½ per cent. was utterly unnecessary. Probably people who say that only look at the matter from one point of view, and have not before them all the considerations which the right hon. Gentleman had, but one would like to know why it was that in the first fortnight of April suddenly it became impossible to place the requisite number of Treasury bills, except at this most inordinate rate of interest, 6½ per cent., which is now being charged.

Mr. CHAMBERLAIN: Money, like other things, is subject to the ordinary law of supply and demand. The competition of trade was too much for me at the rate I then offered. Money went to trade rather than in Treasury Bills.

Major O'NEILL: Of course, I can quite understand that was the only consideration, but one does not know why there was such a sudden change as between the month of March and the month of April, and I daresay it is explained by the considerations of the money market. I would merely, in conclusion, say that my own view is that this Budget is, on the whole, a bold attempt, and I believe will be a successful attempt, to grapple with the extraordinarily difficult financial position which this country has got before it. We are showing the world a remarkably sound financial position; we are setting an example to Europe which, if followed, will be of the utmost importance in the present most difficult position of the finances throughout the Continent of Europe. France, Italy, all the bankrupt or semi-bankrupt States of Europe will, after this Budget, be able to look to this country, and to see that we, at any rate, are taking the proper line and are determined to adopt only measures which can restore our financial stability, and that we are commencing to repay our vast National Debt. It is a remarkable showing, and I trust that if the Estimates of the Chancellor of the Exchequer are realised when the Budget comes round again next year, it will be said, as indeed it can be said to-day, the credit of Great Britain stands higher at this moment, even after five years of terrible War, than it ever stood in the whole history of our nation in the past.

Sir J. BUTCHER: I desire to ask the attention of the Committee to a subject which, so far as I know, has occupied very
little attention as yet in this Debate, and that is the question of the Corporation Profits Tax. When I look at the Paper which was circulated this morning, I find that this is intended to be a tax on the profits of a business carried on by a corporate body incorporated under the laws of the United Kingdom, and what I want to ask the Chancellor of the Exchequer is to make it clear, if he will, to what companies this tax is intended to apply. Is it intended to apply only to companies known as limited liability companies, or is it intended to apply, as the words of the Resolution seem to imply, to such companies as railway companies and other statutory undertakings?

Mr. CHAMBERLAIN: Yes, to railway companies.

Sir J. BUTCHER: I am rather surprised to hear it, because in the White Paper which was issued this morning, it was stated that it only applied to limited liability companies, and that is certainly not what railway companies are generally known as. In the speech of my right hon. Friend opposite he justified the tax as a tax which could be properly levied on limited liability companies, and I notice many papers, in their comments this morning, referred to it as a tax only on profits of what can strictly be called limited liability companies. I regret very much to hear that it applies to railway companies. This tax is fully justified if applied to limited liability companies which are making from 10 per cent. to 20 per cent., or more, and which up till now have been in the habit of evading the Income Tax on the dividends paid, firstly, by carrying very large sums to reserve; and, secondly, by issuing a portion of their profits in the way of capital as bonus shares. I can quite understand my right hon. Friend desiring to hit the profits of these companies so as to avoid evasions of the Income Tax of the sort I have described. But when you come to companies like railway companies, the ordinary shares of which are getting from 2 to 5 per cent., seldom more, I myself can see no case whatever for throwing upon the ordinary shareholders this new imposition of Is. in the pound, or in many cases it may be 2s. in the pound.
Let me suggest to my right hon. Friend the kind of hardship which the ordinary
shareholders of a railway company may suffer, and, indeed, for that matter, the shareholders of many ordinary limited liability companies. I am not speaking now of the companies which make profits. I think it is quite right to tax them. But when you have a company, whether it be a railway company or the limited liability company, the ordinary shares of which are now earning, and for some time past have been earning, from one to five per cent. dividends, it will really be an intolerable hardship to place upon the ordinary shareholders this new tax of from five to ten per cent. The Committee will appreciate the fact that it is only upon the ordinary shareholders that this tax will fall. It will not fall upon the preference shareholders, because they are entitled, by the constitution of the company, to their full preference dividend at a fixed rate. But the profits of the undertaking are reduced five or ten per cent. by the extraction of this tax, and the whole burden of this new tax falls upon the ordinary shareholder.

Mr. CHAMBERLAIN: The hon. and learned Gentleman must keep in mind the limitations of the tax in the shape of large fixed prior charges for debenture interest and so on, which means that the charge upon the ordinary shareholders' profits does not exceed 2s. in the £.

Sir J. BUTCHER: I am very much obliged to my right hon. Friend for his explanation, but that is exactly what I understood. It really means that the tax on the ordinary shareholders must be 5 per cent., that is in case there are no preference shareholders, but where there are a large number of preference shareholders it may be 10 per cent., but it cannot be more. Therefore, I am right in saying that this tax falls exclusively upon the ordinary shareholders of the company. I say that when the ordinary dividend is a small one the new tax is a very heavy one and a great hardship. It amounts to an additional Income Tax, or a payment of the nature of Income Tax, upon the dividends which these ordinary shareholders receive, and it varies between Is. and 2s. in the £. Therefore, you take one class of the community, the holders of ordinary shares, and you say to them, "You must pay an additional Income Tax of from 1s. to 2s. in the £." But that is not all,
because if the payer is a poor man, if the charge was imposed by Income Tax, he would get the exemption appropriate to his poverty, but by imposing it in this form and not as Income Tax he gets no relief at all. Consequently the man who is really liable according to the ordinary Income Tax rule to pay only 2s. or 3s. in the £, if he holds ordinary shares he will pay Is. or 2s. more. I urge my right hon. Friend to consider that case and see whether he cannot modify this tax in some way or another. The way in which it ought to be modified, if it is possible to do it administratively, would be to say that it shall only be imposed when the dividends on the ordinary capital of the company exceed 10 per cent., and then I think it would be quite reasonable to say to a man, "You are receiving 10, 15 or 20 per cent. and therefore you must pay an additional tax of 1s. or 2s. in the £." I think it is extremely unfair to make him pay when the dividends he is receiving amount to only 2, 3 or 5 per cent. on his invested capital.
I wish now to refer to the Motor Taxes. The tax on petrol is going to be abolished, and there is to be an increased tax on motors. On looking at the Resolution I find that the exemption or abatement hitherto given to doctors and to veterinary surgeons, which was given in the form of a reduced payment of the petrol tax, is now to be entirely abolished, and whereas formerly these two professions got an exemption for driving about the country discharging their duty by way of a reduction of the petrol tax, now they are to get no abatement whatsoever in the taxes they pay on their motors. I ask the Chancellor of the Exchequer to reconsider that question in consultation with the Minister of Transport.

Mr. CHAMBERLAIN: I will consult the Minister of Transport on the subject, because he is in charge of that portion of the tax.

Sir J. BUTCHER: I hope the right hon. Gentleman will remove what appears to me on the face of it a very manifest injustice. Veterinary surgeons and doctors travel about the country very largely in order to earn their incomes; they have to get about more than any other class for the purposes of their business, and I really cannot see why the exemption hitherto granted should be withdrawn.
The only other point to which I would refer are the taxes on French wines. So far as the consumer is concerned, these taxes appear to be perfectly fair. Most people are willing to pay more for their French wines and their champagne if they can afford to drink them, and I believe they will be quite willing to pay the increased duties. But I would ask my right hon. Friend to consider is it really worth while, for the sake of the comparatively small revenue we shall get from this increased taxation—something over £4,000,000 this year and slightly more in future years— is it really worth while to put these heavy taxes on the products of France? We know how France has suffered. We know that France can only restore the exchange value of her franc by exports to this and other countries, and so far as we tax her exports—and very important exports, too, are her wines and champagne—and thereby reduce considerably the amount of those exports, we shall be inflicting on her a very great hardship. I suggest, therefore, not from the point of view of the consumer, but from the point of view of helping our Ally, that these taxes should either be removed or diminished. I wish to join in what has been said from all parts of the House in congratulating the Chancellor of the Exchequer upon the courage he has shown, not 6nly in maintaining existing taxation, but in adding new taxes for the purpose of creating, according to his estimate, a great enormous surplus of £234,000,000 which will have the effect, if the amount is realised, of not merely substantially and largely reducing our funded debt, but of doing what, from one point of view, is even more important, making a large and continually increasing reduction in our Floating Debt.

Mr. TREVELYAN THOMSON: The fact that the right hon. Gentleman's Budget has been generally acclaimed a courageous one, and rightly so, makes some of us think that it might have even been even more courageous had the right hon. Gentleman taken his courage in both hands and dealt boldly and drastically with the question of war wealth. I know he will say that there is a Committee dealing with that matter. But one might retort very fairly, Why was not that Committee appointed earlier, and why did the Government wait until the House practically forced them to undertake this in-
quiry, with the result, now that we are considering the second Budget since fighting ceased, that we have delayed dealing with this question, and possibly delayed it so long that it will prove impossible to deal adequately with it? The hon. Member for Oxford (Mr. Marriott) paid lip-service to the principle, or what he called the sentiment, of the taxation of war wealth, but he adduced many practical reasons why he thought that that which was desirable in principle could not be carried into effect. How often have we heard that same argument used against any new innovation with regard to taxation? Somewhat similar arguments were used at the time the Death Duties were proposed, and so it has been with every reform attempted on the question of taxation. The hon. Member for Oxford cited, for instance, examples of the kind of war wealth acquired, that acquired by fraud, that obtained by gross profiteering, that by good fortune in the markets, and that by the hard saving of individuals, and he put to the Committee the question: Would you tax all these various kinds of war wealth in exactly the same way, and, if so, would it be equitable to do so? I submit that that same argument applies equally to the Excess Profits Duty, to the War Profits Tax which the Chancellor of the Exchequer has instituted, and to the question also of Income Tax; indeed, in principle, to a greater or less degree, all these various objections apply to any kind of taxation. It is no valid argument to say that, because in the incidence of them there may be a certain number of inequalities, therefore you must refuse entirely to carry out that which on broad principle is sound and equitable. The same reasons might have been adduced with regard to conscription. Personal hardships and inequalities did take place when the country was in danger, and those inequalities, which were ruthlessly imposed then, should be imposed now when the finances of the country demand equally drastic remedies. Therefore, it is deplorable that the Chancellor of the Exchequer has not made use of that large fund of money which has been acquired during the War in order to reduce even still further the National Debt.
I would also join with those who have deplored that the right hon. Gentleman has seen fit to abolish the Land Duties. I know that by a certain section of the
House this announcement has been received with a considerable amount of rejoicing, and the question has been put as to the small amount that has been raised by these duties. I submit that it was never intended that in the early years there would be a heavy increment of value accruing to the State, but rather to lay the foundations of that increment which, as time went on, would occur, as it has particularly with regard to the land surrounding our large towns. Those who represent large industrial constituencies know full well how the prosperity of the industries of a town, the social development, the amenities, the growth of houses and the provision of parks and recreation grounds are seriously handicapped and held up by this increment in the value of land. Hon. Members talk about the profiteering of small tradespeople and of large trusts. These are cases which have arisen recently, but the profiteering in land has been going on for generations, and the profiteer has escaped almost entirely that taxation which we hoped to institute by the duties of 1909–10. We all know the land on the outskirts of towns, originally worth £40 or £50 agricultural value, has increased ten or a hundredfold in value. When the Budget of 1909–10 was passed, it was looked upon by many as the Magna Charta of Land Reform, and it was expected that profiteering in land would cease and that the increased value due to the growth of the community would help to pay the communal charges. I join with those who have expressed regret that these taxes should have been repealed before some other form of taxes of a like nature has been instituted. Regret has been also expressed that the machinery of valuation remains. I am glad that it does remain; I think there is every justification for it. We have had a striking example of that in the carrying out of the Government's housing programme. We have seen how, in the first few months, over £1,000,000 has been saved to the taxpayers and ratepayers of this country, owing to the lower purchase price of the land required for housing, because of the work of this Valuation Department. I hope the Government will maintain the Department, so that, as the need for housing increases, and for parks, recreation grounds and schools, the machinery will be there to see that the rate-
payer and taxpayer are not robbed in the future as they have been in the past. Reference has been made to the need for a reduction of the huge expenditure of the various Government Departments. Where waste occurs, we all would join in the desire to see it eliminated. Some of us regard the huge expenditure on the Army, the Navy and the Air Force as of that nature, and consider that, in the second year after the close of a war that was supposed to be a war to end war, and when a League of Nations has been formed which was to save the world from the dangers of the future, it is deplorable that the nation which was one of the pioneers of these reforms should not have set a better example with regard to this Army and Navy expenditure.
With regard to the Civil Service Estimates, I think there is a great deal in what the Chancellor of the Exchequer said. He asked the House, and his critics, to point to any £5,000,000 that might be saved on any particular service, and I think we should be labouring under a delusion if we thought there was any reasonable chance of any considerable reduction in the Civil Service Estimates in the future. Are we going to economise on education? Hon. Members will have noticed, from questions on the Paper recently, that the Board of Education have increased the rateable value on which necessitous school areas receive grants, thus putting an extra burden on the ratepayer as distinct from the Exchequer. The argument would be that the Government must economise, and are seeking to deduce their share of the national burden so far as education is concerned. It would be penny wise and pound foolish to starve our educational work. Instead of spending less money there, we have to spend many more millions in the future than we have spent in the past, and therefore we should be deceiving ourselves if we thought that, so far as education was concerned, we were going to reduce our Estimates. With regard to housing, it is suggested that the cost in the next year, or the year after, or five years hence, is going to be less than at the present time. Surely it is an increasing burden. Again, take the health services of the community. We know how social conscience has been developed, and that in every town of any size maternity welfare centres have been started dealing with mother and child. We know how the
whole health organisation of the towns makes a greater demand on the public purse. These health reforms, which eventually will pay the country over and over again, even from the narrow view of pounds, shillings and pence, will in the first years add to the burden not only of the local rates, but also of the National Exchequer. With regard to these Civil Service Estimates, large as they are, we cannot seriously expect any reduction in the near future. We must be prepared to face considerable increases in connection with education, housing, health services, and various other obligations which are rightly charged on the community as a whole. Then there is the question that we have had before us over and over again of pre-war pensions. The justice of that claim has been admitted from the Government Bench, and these pre-War pensioners, whether in the Police or the Civil Service, or the ex-service men of pre-War days, all have a perfectly just claim, but owing to the exigencies of finance, owing to huge taxes with which we are burdened, this just claim has to be refused. We must provide that these just claims are met in the future, and we must provide for the claims of the ex-service men, who in many cases have not received that justice, and that generous treatment, which was promised to them before they enlisted. We must provide in the future greater sums to meet their needs. Therefore it is impossible to expect any considerable saving, but rather there will be an increased charge on the Exchequer for these various social services in the future. In view of these increases, which are bound to take place, it is the more deplorable that the Chancellor of the Exchequer has not taken his courage in both hands and faced the difficulties which there are of levying a tax on the War wealth of the country, War wealth which very rightly should be charged with this extra expense and burdens due to the increased social consciousness and the realisation of the responsibility of the community to those who are less fortunate than other members of the community. Therefore I hope when the Supplementary Budget is produced, if possible he will not merely reduce the Debt to the large extent proposed, which we must all admit is sound finance, but to a greater extent to provide means whereby these social services, these obligations which the nation has no
right to refuse, may be fairly and honestly met.

Lieut.-Colonel Sir F. HALL: We have heard all sorts of compliments paid to the Chancellor of the Exchequer on the excellent report he has brought forward; still, while congratulating him on the success which has attended his Budget and on the excellent condition in which we find ourselves with regard to the commercial position, nevertheless I am sure he will not be surprised if there are certain points in his proposals which do not meet with approval in all parts of the House. The City has to be considered because it is a very important factor. The Chancellor of the Exchequer has found it necessary on many occasions to approach the large financial houses and get assistance to enable him to carry on the business of the country, and he informed us yesterday that he had found it necessary to go into the financial market to borrow in the first two weeks of this month. Therefore my right hon. Friend should pay some attention when the City comes along and says "We do not think the whole of the proposals of the Chancellor of the Exchequer are of a reasonable nature. I am particularly referring to the Excess Profits Duty. We were told when it was first put on that it was purely a war measure, and when my right hon. Friend last year brought forward a proposal for a reduction to 40 per cent. he was apologetic in his manner that he had not been able to clear off the whole tax. Then, to our surprise, there is to be an increase of 20 per cent. in this extraordinary tax. It is a serious matter. Take the case of young men who, in many cases, served in the Army, the Navy, or other branches of service, and have now settled down either to start business or to recommence business. They had served their apprenticeship beforehand. They have no datum line. They have nothing by which they can obtain exemption. It means that you are going to mulct these people in 60 per cent. tax on the profits they are able to make. It is not reasonable or fair or desirable in the interests of the country as a whole that that should be done. We hear a great deal about the high prices that have to be paid. Take the case of the ordinary shopkeeper who was selling an article at a pre-war price of 30s. He has had extra expense of all sorts and he has
to get an additional profit to enable him to pay his expenses. On the 30s. he may wish to make an additional 5s. profit. To enable him to obtain that profit and pay 6s. in the pound income tax he has to add 23s. 6d. to 30s. thereby bring the price of the article to 53s. 6d. He has to do that in order to get his additional 5s. profit. I hope the Labour party will consider this case, because they seem to be particularly jubilant that there is to be an increase in the Excess Profits Duty, and apparently do not recognise how it is going to operate on the articles which it is necessary to purchase. I trust that before my right hon. Friend comes to any decision he will be able to tell us he will make some reduction in the additional 20 per cent. which he intends to levy during the ensuing year. With respect to the Corporations Tax, I do not think it should be placed until there is a reasonable return on the money invested. If the Chancellor is going to say that he will take 5 per cent., irrespective of whether there is anything left to the shareholders, then I am sure that that will not be accepted throughout the country as a reasonable proposal. I should be glad if the Chancellor of the Exchequer could tell me whether he is in a position to give any remission in Income Tax to a class who have not received reasonable consideration in the past It was on the 9th December last that I put a question to the right hon. Gentleman, whether any remission was made in Income Tax on behalf of a manual worker living away from home or having to make a journey from home in order to carry out his work.
The reply I received was that a maximum allowance of 2s. 6d. a day was made to the manual labourer. I asked my right hon. Friend whether he had considered the question not only of the manual labourer but of the clerical staff. There are tens and hundreds of thousands of clerical men who are receiving small consideration, receiving not nearly the amount that is paid in many cases to the manual labourers. I made what I thought was a reasonabe request that the same consideration that has been given to the manual labourers should be given to clerks and those who earned their living not by what is called manual labour. It seems to me that these people have not co-
operated sufficiently to bring pressure to bear upon the Government to press their claims; but I am sure that the right hon. Gentleman will consider that many of these people, who have to keep up a respectable appearance, find themselves in a very difficult position in making ends meet. They are not in many cases earning as much as those who are in the category of manual labourers. These people have to travel from their homes to business, and I would ask my right hon. Friend to give to them the same consideration that is given to manual labourers.
In the Report of the Royal Commission it is suggested that the local Income Tax Commissioners should be done away with. I mentioned at question time the other day that they are the only buffer which the Income Tax payer has between him self and the State. He goes to these people and asks questions and receives information, and he has somebody upon whom to rely. There is an enormous number of people asking that these officers may be retained. I doubt whether any hon. Member has received any communication from any of his constituents asking that their services should be dispensed with. They have carried out their duties between themselves and the Government to the best of their ability, and they have, in the great majority of cases, given great satisfaction. I hope that the suggestion that their services should be dispensed with will not be carried out. With regard to Super-tax, has not the time arrived when the amount claimable should be not on the gross but on the net amount? It seems inequitable to tax a man on what he does not get. Suppose a man has an income of £10,000. Income Tax payable at 6s. in the pound is £3,000. Instead of—

It being Eleven of the Clock, the Chairman left the Chair to make his report to the House.

Committee report Progress; to sit again To-morrow.

The remaining Orders were read and postponed.

ADJOURNMENT.—Resolved, "That this House do now adjourn."—[Lieut.-Colonel Sir It. Sanders.]

Adjourned accordingly at Two Minutes after Eleven o'Clock.